NCLT Ruling: IRP Fees Not Payable During CIRP Stay, Settlement Closure Not a Withdrawal
Bengaluru Bench rules on fee entitlements and procedural requirements post-settlement in insolvency case
In a significant ruling, the National Company Law Tribunal (NCLT) Bengaluru Bench, presided by Shri. Sunil Kumar Aggarwal and Shri. Radhakrishna Sreepada, has delivered a judgment concerning the fee entitlements of an Interim Resolution Professional (IRP) during a stay on Corporate Insolvency Resolution Process (CIRP) proceedings and the procedural implications of settling such cases.
The case involved Ms. R. Bhuvaneshwari, the IRP of M/s Mindlogicx Infratech Private Limited, against Union Bank of India, the financial creditor. The key issues addressed were the IRP's entitlement to fees during the stay period and whether the settlement between the parties necessitated the filing of Form FA, typically required for withdrawal of CIRP applications.
The tribunal concluded that no fees are payable to the IRP during the stay period as no CIRP-related activities were conducted. This decision aligns with the principle that an IRP or RP cannot perform any actions towards CIRP when a stay is in effect, thereby nullifying any fee claims for that duration.
Moreover, the tribunal clarified that the closure of CIRP due to settlement by the National Company Law Appellate Tribunal (NCLAT) does not equate to a withdrawal of the CIRP application, and thus, filing Form FA is unnecessary. The decision emphasized that the IRP's role effectively ends once the CIRP is closed by NCLAT, and no further payments can be claimed beyond this point.
The tribunal, however, acknowledged the IRP's work during the initial week before the stay, determining a fee of Rs. 1,50,000/- including GST for this period, which the Corporate Debtor is to pay within two weeks.
This ruling provides clarity on the financial and procedural expectations for IRPs during stays and post-settlement scenarios, influencing future insolvency proceedings where similar conditions arise.
Bottom Line:
Corporate Insolvency Resolution Process (CIRP) - Fees and expenses of Interim Resolution Professional (IRP) during the period of stay and post-settlement - No fees payable during the stay period as no CIRP-related work could be carried out - IRP entitled to reasonable fees only for the period before the stay.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 5(13), Regulation 33, Regulation 30-A, Rule 11 of the NCLT Rules, 2016.
