NCLT grants extension of the period of CIRP in lieu of Covid
The National Company Law Tribunal (NCLT) Mumbai Bench granted the Resolution Professional (RP) of the Corporate Debtor – Cox & Kings the maximum time permissible to be extended under law i.e. of 330 days and also held that since there is sufficient time available for completion of Corporate Insolvency Resolution Process (CIRP), no further extension will be granted in case the process is not completed within the stipulated time.
In this case, the Financial Creditor – Ratan India Finance Private Limited had filed a Company Petition under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) on October 22, 2019 against the Corporate Debtor – Cox & Kings.
The applicant (RP for the Corporate Debtor) moved the NCLT with the submission that the period of CIRP of the Corporate Debtor of 180 days expired on April 19, 2020. Therefore, the period from March 23, 2020 until April 19, 2020 (a total of 27 days) overlapped with the Covid-19 induced nationwide lockdown and therefore, this period should be granted to the Corporate Debtor from August 1, 2020. An application under Section 12(2) of the Code was filed seeking an extension of the period of the CIRP of the Corporate Debtor.
The applicant prayed for an extension of a period of 150 days from calculating it within 180 days of the CIRP. He sought for extension between the dates August 28, 2020 and January 24, 2021.
The NCLT relied on the notifications issued by the Maharashtra Government which stated that the lockdown in the entire state of Maharashtra has been extended till July 31, 2020 and also on the IBBI notification dated April 20, 2020 in which an amendment was made in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 by inserting a new clause in the regulation, that provides for exclusion of period of lockdown imposed by the Central Govt. in the wake of Covid-19 outbreak from the computation of timelines for CIRP, which could not be completed due to such lockdown situation.
The tribunal also relied upon the order of the National Company Law Appellate Tribunal (NCLAT) in the case of Quinn Logistics India Pvt. Ltd. v. Mack Soft Tech Pvt. Ltd. and granted an extension to the applicant.
The NCLT thus excluded the period from March 23, 2020 to July 31, 2020 pursuant to the IBBI notification by Central Govt. read with new amendment. The tribunal allowed the application and granted extension. It also excluded the time period consumed in litigation.