NCLT Chandigarh Allows CIRP Withdrawal After Debtor Settles With Sole Financial Creditor, Operational Creditor

The Chandigarh bench of the National Company Law Tribunal (NCLT) has allowed the withdrawal of the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor after its suspended management settled the claims of the sole financial creditor and the operational creditor. Following the settlements, the statutory requirements for withdrawal of the CIRP stood fulfilled.

A bench of Judicial Member Khetrabasi Biswal and Technical Member Shishir Agarwal observed:

“The Operational Creditor stands settled, the sole Financial Creditor has approved the withdrawal proposal with 100% voting share, and no material has been placed on record to demonstrate that any stakeholder would suffer prejudice on account of withdrawal of the CIRP. On the contrary, withdrawal of the CIRP pursuant to the settlement arrived at amongst the stakeholders would subserve the interests of all concerned and bring quietus to the insolvency proceedings.”

The tribunal further observed:

“Thus, the principal stakeholders of the insolvency process have amicably settled their disputes and expressed their intention to terminate the CIRP proceedings.”

The CIRP against Redhu Farms Private Limited commenced on March 30, 2023, after the tribunal admitted an insolvency petition filed by Aviagen India Poultry Breeding Company Private Limited. Prashant Gupta was appointed as the Interim Resolution Professional and was later confirmed as the Resolution Professional.

Bank of Baroda was the sole member of the Committee of Creditors with 100% voting share. Adesh Kumar Singla subsequently replaced Prashant Gupta as the Resolution Professional.

No viable resolution plan was received during the CIRP. The Committee of Creditors resolved to liquidate the corporate debtor. However, no liquidation order had been passed when the suspended management submitted a One Time Settlement proposal to Bank of Baroda.

The bank accepted the settlement for ₹14.75 crore against its admitted claim of about ₹26.40 crore. The suspended management also paid about ₹79.36 lakh to Aviagen India Poultry Breeding Company Private Limited towards full and final settlement of its admitted claim.

The operational creditor thereafter submitted Form FA seeking withdrawal of the CIRP. The proposal was placed before the Committee of Creditors.

Bank of Baroda, the sole member of the Committee of Creditors, approved the withdrawal proposal with 100% voting share. Subsequently, the tribunal allowed the plea to withdraw the CIRP and lifted the moratorium.

For Applicant: Advocate Harsh Goel