Principal Bench allows 45-day extension for completion of repayment plan approval for Indian Bank's personal guarantors.
In a recent decision, the National Company Law Appellate Tribunal (NCLAT) has set aside the orders of the National Company Law Tribunal (NCLT), Ahmedabad, which had previously rejected Indian Bank's request for an extension of the Pre-Insolvency Resolution Process (PIRP) period. The NCLAT's Principal Bench in New Delhi, comprising Mr. Justice Mohammad Faiz Alam Khan and Mr. Naresh Salecha, has granted a 45-day extension to facilitate the completion of the repayment plan.
Indian Bank, the appellant in this case, had initiated proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016, against personal guarantors Sneha Dharmendra Shah and Dharmendra Shah. The bank sought an extension of the PIRP period to finalize a repayment plan that had been approved in principle by the financial creditor but required further authorization from the appropriate authority.
The tribunal's judgment highlighted the importance of facilitating the repayment of loans to financial creditors. It noted that the repayment plans, amounting to Rs. 3,27,50,000 plus PIRP costs, had been agreed upon after extensive negotiations. However, the process was stalled due to pending approvals and the need for e-voting.
The NCLAT emphasized that the purpose of the PIRP is to ensure the repayment of loans, and reasonable time should be granted to complete the process once the plans have been approved in principle. The tribunal found merit in the appeals and allowed the extension, urging the parties to complete the process within the newly granted timeframe.
This decision underscores the tribunal's commitment to balancing procedural requirements with practical considerations in insolvency proceedings, ensuring that financial creditors can recover dues while providing time for necessary approvals.
Bottom Line :
Extension of Pre-Insolvency Resolution Process (PIRP) period allowed for completion of the repayment plan where the financial creditor has in principle approved the repayment plan submitted by the personal guarantors, but requisite approvals from the appropriate authority of the financial creditor are pending.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016, Section 95
