Avoidance Applications Cannot Survive after Conclusion of CIRP

The Delhi High Court in Venus Recruiters Private Limited v. Union of India and Ors.[1] has held that an application for avoidance of transactions cannot be adjudicated by the National Company Law Tribunal (‘NCLT’) upon conclusion of the Corporate Insolvency Resolution Period (‘CIRP’). Once the CIRP has concluded, the NCLT has no further jurisdiction over the matter, except on issues pertaining to the resolution plan itself. The role of a resolution professional (‘RP’) is finite and it cannot continue to act on behalf of the corporate debtor once the new management takes over, unless otherwise provided for in the resolution plan. The Delhi High Court clarified that an application for avoidance of any preferential transaction should be for the benefit of the creditors and is not intended to be utilised by the corporate debtor in its new avatar.

 

[1] 2020 SCC OnLine Del 1479

Published In:Inter Alia - Quarterly Edition - December 2020 [ English Chinese
Date: December 31, 2020