Can an Interim Resolution Professional or the Resolution Professional Reject Time-Barred Claims in a Corporate Insolvency Resolution Process?

Can an Interim Resolution Professional or the Resolution Professional Reject Time-Barred Claims in a Corporate Insolvency Resolution Process?

The issues that keep arising with respect to the Interim Resolution Professional or the Resolution Professional is regarding the claims of the time barred debts. The Swiss Ribbons case had stated that the Interim Resolution Professional is not given the quasi judicial powers but only the administrative power.

Provisions Under IBC and CIRP Regulations

The Interim Resolution Professional is appointed by the NCLT under sec 13 of IBC once the corporate debtor undergoes the insolvency and CIRP process is initiated. The submissions of claims are called for under sec 15 of the Code.

Under the CIRP Regulations, regulation 6(2)(c) of the regulation requires the submission of proof of claim to be made within 14 days from the appointment of the Interim Resolution Professional.

The issue is that whether the verification by the IRP or the RP requires him to verify whether the claims of the creditors of the corporate debtors were time barred as on the insolvency commencement date and whether the IRP or RP has the powers to reject the time barred debt.

Limitation Act

Earlier, the provisions of the Limitation Act were not applicable to the proceedings under the Code. However, later in 2018, by an amendment sec 238A was inserted and the same is applicable to the proceedings or appeals before the NCLT, NCLAT, DRT, DRAT.

However, verification of claims by the IRP is per se not covered under sec 238A of the Code. It is also pertinent to note that the IRP or the RP can reject the time barred debts.

Conclusion

Thus, the IRP or the RP can reject the time barred debts in an insolvency proceedings provided that all the compliances are done with.

Posted By: Adv. Adhishree J. | Posted on: Jan 11, 2021 | Category: Insolvency | Tag:
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