NCLT Recalls Insolvency Admission; Holds CIRP Cannot Continue Amid Missing Records, Asset Opacity and Serious Process Irregularities [Read Order]

The National Company Law Tribunal (NCLT) New Delhi Bench recalled the insolvency admission order against Presidium Educational Institution Pvt. Ltd. And held that the Corporate Insolvency Resolution Process (CIRP) had become fundamentally flawed due to missing financial records, lack of transparency, asset opacity and serious procedural irregularities.

The RP submitted that despite extensive efforts after replacing the erstwhile RP he was unable to obtain basic books of account, financial statements, employee details, ownership records and operational information relating to the corporate debtor.

According to the RP the promoters and suspended directors remained untraceable and consistently failed to cooperate with the insolvency process. Multiple attempts to gain control of the company's digital assets including its website and records also proved unsuccessful.

The applicant further contended that various schools continued to operate under the Presidium brand through a web of trusts, societies, franchise arrangements and related entities, while no corresponding revenues were being routed through the corporate debtor. The Committee of Creditors (CoC) supported the extension request, arguing that liquidation would not maximize value and that additional time was necessary to trace assets and recover control of operations.

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The Tribunal observed that the CIRP, initiated in November 2022 had already crossed the statutory timelines prescribed under the Insolvency and Bankruptcy Code, 2016. The Bench noted that despite repeated extensions, no resolution plan had been received and no prospective resolution applicant was in sight.

The Tribunal also took note of a Court Commissioner’s Report highlighting material discrepancies in the conduct of the CIRP and serious concerns regarding the functioning of the erstwhile Resolution Professional. The Tribunal found that the CoC had failed to adequately address these deficiencies.

The Bench comprising Judicial Member Manni Sankariah Shanmuga Sundaram and Technical Member Atul Chaturvedi passed the order while deciding an application filed by Resolution Professional (RP) Ashok Arora seeking a further extension of the CIRP by 90 days.

Thus, the Tribunal recalled the admission order dated November 29 2022, terminated the CIRP, withdrew the moratorium and directed restoration of management to the suspended board of directors.

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