Withdrawal of CIRP plea not allowed where purported plan was not a settlement simpliciter as envisaged u/s 12A

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  • Last Updated on 1 October, 2021

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Withdrawal of application Corporate insolvency resolution process

Case Details: Siva Industries and Holdings Ltd., In re - [2021] 130 taxmann.com 440 (NCLT- Chennai)

Judiciary and Counsel Details

    • R. Sucharitha, Judicial Member and Anil Kumar B., Technical Member
    • Sanjeev Kumar, Anshul Sehgal, Advs., Arvindh Pandian, Sr. Adv., Avinash Krishnan Ravi, Adv., Satish Parasaran, Sr. Adv., Subhang P. Nair and M.L. Ganesh, Advs. for the Appearing Parties.

Facts of the Case

In the instant case, the Corporate Insolvency Resolution Process (CIRP) in case of the corporate debtor was admitted and Insolvency Resolution Professional (RP) was appointed. Initially, two resolutions plans were received, however, both of them were withdrawn.

After this, a third resolution plan was received which did not receive consent from the Committee of Creditors(CoC). Soon after, the promoter of the corporate debtor, although ineligible to submit a resolution plan tried to restructure loans under the pretext of a settlement proposal.

NCLT Held

However, the purported plan was not a settlement simpliciter as envisaged under section 12A, rather, it was a business restructuring plan. Further, as per the settlement Plan, there was no final offer made by the promoter of the corporate debtor and also no acceptance made by CoC in this regard.

Therefore, there being ambiguity of terms of settlement and no finality having been reached between the promoter of corporate debtor and CoC as per settlement proposal, order for withdrawal of CIRP could not have been passed.

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