The Insolvency and Bankruptcy Board of India (IBBI) warned and directed to be more careful and cautious while dealing with the provisions of the Code and the Rules and Regulations.
The IP was appointed by the National Company Law Tribunal (NCLT) under the Corporate Insolvency Resolution (CIRP) as Interim Resolution Professional (IRP)/ (RP).
The Show Cause Notice (SCN) has prima facie observed contravention of sections 208(2)(a) and 208(2)(e) of the Code, regulations 36A(5), 36A(6), 36A(10), 36A(11), 36A(12) of IBBI (InsolvencyResolution Process for Corporate Persons)Regulations, 2016 (CIRP Regulations), and regulation 7(2)(h) read with clauses 3, 9, 12, 14 and 17 of the Code of Conduct of IBBI (Insolvency Professional) Regulations, 2017 (IP Regulations).
A prospective resolution applicant must submit an Expression of Interest (EOI) within the timeframe stated in the invitation if they meet the conditions of Regulation 36A(5) of the CIRP Regulations. Furthermore, the Expression of Interest (EOI) received after the deadline provided in the invitation for EOI may be rejected under Regulation 36A(6) of the CIRP Regulations.
The Board noticed that, while being aware that the CoC had already denied DSKL’s request to submit EOI after the closing date specified in the invitation for EOI, the IP urged DSKL to submit EOI within 10 days after taking over as RP in the Corporate Debtor’s CIRP. The CoC’s decision from the 7th CoC meeting has been overturned by the IP through this action.
The Board further noted that by allowing DSKL to submit its EOI after the deadline, the IP had circumvented the requirements of Regulations 36A(10), (11) and (12) of the CIRP Regulations, which demand that the RP provide a provisional list of eligible prospective resolution applicants to the CoC and to all other prospective resolution applicants and give those applicants the chance to object to a prospective resolution applicant’s inclusion or exclusion, respectively.
The DSKL submitted its EOI on March 12, 2020, and the former RP stated that it could not be taken into consideration because the deadline had passed. According to the IP, the former RP did not evaluate the merits of the EOI DSKL submitted and did not rule DSKL ineligible based on the CoC’s eligibility standards.
Further submitted that the CoC was not informed that there was no provision under the Code, its rules or regulations which permitted re-issuance of Form G for inviting further expression of interest from any PRA.
Also, it was claimed that given the covid lockout, it was challenging to locate enough PRAs to effectively resolve and recover a CD. So, in the sole interest of the CD, the IP decided to provide DSKL a chance to resubmit its EOI in order to raise the likelihood of a successful settlement and rescue of CD and also try to maximise the value of the CD’s assets.
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