2017 (10) TMI 1388 - Tri - Companies Law

Corporate insolvency proceedings - one meeting of the Committee of Creditors during 180 days of the period prescribed conducted - no Resolution Plan has been submitted - Held that - From the record, it is clear that only one meeting of Committee of Creditors took place on 12th June 2017 and after that, no meeting of Committee of Creditors was held, and ultimately at the fag end of 180 days, Interim Resolution Professional has submitted his report that no Resolution Plan has been submitted. Since there is no recommendation of Committee of Creditors for extension of the time limit prescribed under the Rules, therefore, Corporate Debtor shall go under liquidation as per provision of Chapter-III of the Insolvency and Bankruptcy Code, 2016 read with Insolvency Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Since the Resolution Professional, Shri Sandeep Kumar Gupta has conducted only one meeting of the Committee of Creditors during 180 days of the period prescribed, even though no Resolution Plan was under consideration, but he did not advertise the notice in the newspaper for inviting proposal from investors /creditor or any other person. Resolution Professional has not also taken consent of Committee of Creditors for being appointed as Liquidator. On perusal of the record, it appears that the Corporate Debtor has filed this petition under section 10 of the Insolvency Bankruptcy Code, 2016 for merely buying time. It also appears that RP has not taken proper steps for inviting Resolution Plan from investors and he submitted for further directions. In the present case, we think it proper not to appoint Resolution Professional as Liquidator because he was appointed on the recommendation of the Corporate Debtor and he has not taken appropriate steps for completing the Resolution Plan. So, the request is being made to Insolvency Bankruptcy Board of India for recommending a name of Resolution Professional for being appointed as Liquidator.

Issues:
1. Admission of Company Petition under section 10 of the Insolvency & Bankruptcy Code, 2016.
2. Progress report and Committee of Creditors' meetings.
3. Completion of Corporate Insolvency Resolution Process within prescribed time.
4. Appointment of Resolution Professional as Liquidator.
5. Adequate steps for inviting Resolution Plan.
6. Communication with Registrar of Companies and Insolvency & Bankruptcy Board of India.
7. Liquidation process and moratorium orders.

Analysis:
1. The Company Petition (1B) was filed by the Corporate Debtor under section 10 of the Insolvency & Bankruptcy Code, 2016, alleging financial distress exceeding assets, losses in operations, and negative cash flow for specific years. The petition was admitted, and an Interim Resolution Professional was appointed.

2. The Interim Resolution Professional conducted meetings with the Committee of Creditors, where decisions were made to appoint him as Resolution Professional. However, no Resolution Plan was received within the stipulated time frame. Only one meeting of the Committee of Creditors took place, and no extension was recommended, leading to the decision for liquidation.

3. The Resolution Professional reported the need for appropriate direction as the 180-day completion period was approaching without a Resolution Plan. The lack of progress in inviting proposals or seeking consent for liquidation raised concerns about the Resolution Professional's actions during the process.

4. The Tribunal decided not to appoint the Resolution Professional as Liquidator due to inadequate steps taken for completing the Resolution Plan. A request was made to the Insolvency & Bankruptcy Board of India for recommending a suitable Liquidator.

5. Orders were passed to communicate with the Registrar of Companies, inform the Insolvency & Bankruptcy Board of India for a Liquidator appointment, issue a public announcement for liquidation, and cease the moratorium under specific sections of the Insolvency & Bankruptcy Code, 2016.

6. The Liquidator, upon appointment, was instructed to follow the prescribed procedures for liquidation under Chapter III of the regulations for Corporate Persons. A further progress report was scheduled for a specified date to monitor the proceedings effectively.

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