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2018 (1) TMI 1374 - AT - Insolvency and BankruptcyCorporate insolvency process - Duties of Resolution professional - no possibility of approving any resolution plan - stated that all financial creditors have consented for liquidation process under Section 33(2) of the Code as no resolution plan was acceptable to the Committee of Creditors - Held that - Resolution Professional was under a sacred duty to put forward before the Committee of Creditors that the Code by virtue of Section 25 (2) (h) binds them to permit floating of expression of interest. Alas that was not done Why we shudder to think about any extraneous consideration. We are further of the view that the basic Object Of the Code is resolution and liquidation has to be a measure of last resort, The aforesaid duty could only be performed by inviting the expression of interest from the whole world and the process has to be started by inserting public notices in the two widely circulated newspapers (one in vernacular and the other one in English). The Resolution Professional completely failed in intimating the Committee of Creditors that the resolution plan has to be invited by floating expression of interest. The terms of such prospective applicants were required to be finalized by the Committee of Creditors with the assistance of the Resolution Professional which include the minimum deposits for a prospective Resolution Plan Applicant and the base price, if so advised, by the Committee of Creditors. The final date for the receipt of the resolution plan and other modalities were also required to be finalized. We do not understand how the Committee Of Creditors can take upon itself the idea of saying that no resolution plan was acceptable to them when there was no resolution plan presented to them. This leads us to infer some suspicions. In view of the above, we are unable to accept the continuation of the present Resolution Professional namely Mr. Prabhjit Singh Soni and in his place we appoint Mr. Dinesh Sood to act as Resolution Professional to carry on the further process of Corporate Insolvency Resolution Process.
Issues:
1. Application for acceptance of final status report under Section 33 of the Insolvency and Bankruptcy Code, 2016. 2. Failure of the Resolution Professional to follow duties under Section 25(2)(h) of the Code. 3. Appointment of a new Resolution Professional and extension of time for Corporate Insolvency Resolution Process. Issue 1: Application for acceptance of final status report under Section 33 of the Insolvency and Bankruptcy Code, 2016: The Committee of Creditors recommended the liquidation of the company as no resolution plan was acceptable to them. All financial creditors consented to the liquidation process under Section 33(2) of the Code. The Resolution Professional was appointed as the Liquidator subject to approval by the NCLT. However, during the hearing, it was revealed that no expression of interest was floated to invite resolution plans, and thus, no resolution plan was presented to the Committee of Creditors. The Tribunal expressed concern over the Resolution Professional's failure to fulfill the duty under Section 25(2)(h) of the Code to invite prospective lenders and investors to put forward resolution plans. Issue 2: Failure of the Resolution Professional to follow duties under Section 25(2)(h) of the Code: The Tribunal emphasized that the Resolution Professional had a duty to invite expressions of interest from prospective applicants, finalize terms with the Committee of Creditors, and ensure a transparent process for resolution plans. The failure to follow these procedures raised suspicions and led to the conclusion that the Resolution Professional did not fulfill their obligations. Consequently, the Tribunal decided to replace the current Resolution Professional with a new appointee, Mr. Dinesh Sood, to carry on the Corporate Insolvency Resolution Process. Issue 3: Appointment of a new Resolution Professional and extension of time for Corporate Insolvency Resolution Process: In the interest of justice, a new Resolution Professional, Mr. Dinesh Sood, was appointed to continue the resolution process. The Tribunal extended the time by 90 days beyond the initial 180 days to allow the new Resolution Professional to scrutinize the valuation report and obtain a fresh report if necessary due to significant differences between the previous reports. The final status report of the current Resolution Professional was rejected, and the newly appointed Resolution Professional was tasked with presenting the final report. In conclusion, the Tribunal highlighted the importance of following the prescribed procedures under the Insolvency and Bankruptcy Code to ensure a fair and transparent resolution process. The decision to replace the Resolution Professional and extend the timeline aims to rectify the shortcomings in the previous proceedings and facilitate a more effective resolution of the corporate insolvency.
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