To provide a relief to MSME and to offer them some respite from this pandemic, the process of pre-packaged insolvency resolution was introduced. This PIRP was introduced by way of ordinance dated 04.04.2021 by the Ministry of Law and Justice.
The process is not too tedious and is generally accepted by the court, thus, helping the parties to resolve disputes in a time bound manner.
The Adjudicating Authority cannot allow or approve the application regarding modifications or withdrawals of CoC-approved Resolution Plans once the plan has been submitted before NCLT.
The resolution of a dispute via an arbitration mechanism saves time and cost. The proceedings are conducted as agreed by the parties or accordingly. However, if the parties are not satisfied with the award, then it can be challenged also.
Claims that do not form part of the resolution plan will be extinguished on the date of the adjudicating authority’s acceptance of the resolution plan. This ruling has reaffirmed the IBC’s goal, which is for the Corporate Debtor to start over with a clean slate based on the resolution plan.
Supreme Court’s decision in Maharashtra Seamless Limited shows that the commercial wisdom of the CoC will be given top priority when deciding on the feasibility and viability of the resolution plan.
The NCLAT, in its Order dated 23.04.2019, ruled that GMSPL’s (Ghanshyam Mishra and Sons Pvt. Ltd.) Resolution Plan is better compared to the other Applicants. However, NCLAT noted that the parties’ claims that are not covered in the Resolution Plan may be raised before the relevant forums.
A resolution plan under Regulation 37, shall provide for the measures, for insolvency resolution of the corporate debtor for maximization of value of its assets.
No further legal action shall be permissible by creditor, whose claim has been rendered unsatisfied as per the resolution plan.
Resolution applicants enter the CIRP and prepare “Resolution Plans,” which are effectively instruments for taking over a corporate debtor, paying its creditors’ debts, and completing its recovery and restructuring.
It is advisable to the creditors to make a plea of initiating Group Insolvency while filing an application for initiation of CIRP against a corporate debtor.
Laws relating to IBC that caused inadequate and ineffective results with undue delays has proven its success by a dramatic reduction for resolution of stressed assets at an average of 340 days as compared 4.3 years in the era before the IBC as per the most Economic Survey.
The period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown.
The resolution plan can be challenged by an aggrieved person as per the grounds mentioned in Sub-Section (3) of Section 61 of the Code.
Once the resolution plan is approved and is implemented under IBC, no issue can be raised at a later stage when resolution Process Costs and fees of the Resolution Professional.
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