Whether CIRP can be terminated where all Financial Creditors and Operational Creditors withdrew their claims and Creditor who initiated CIRP is punishable under Section 65(1) of IBC 2016? – Manish Kumar Bhagat, IRP Pankaj Events and Celebrations Pvt. Ltd. – NCLT Ahmedabad Bench
In this case, the CoC was comprised of two financial creditors, two operational creditors and one other creditor. Both the financial creditors have withdrawn their clams. Both the operational creditors withdrew their claims.
NCLT held that:
(i) In the circumstances, when the financial and operational creditors have withdrawn their claims, neither the operational creditor nor the financial creditors, nor the corporate debtor are responding/interested in the conducting CIRP and there being no realizable assets with the corporate debtor, we deem it appropriate to terminate the CIRP of the Corporate Debtor.
(ii) Issue a show cause notice, under Rule 59 of the National Company Law Tribunal Rules, 2016 to the Operational Creditor through its Directors as to why penalty as stipulated under Section 65(1) of IBC, 2016 should not be imposed on it.