2019 (9) TMI 1426 - Tri - Insolvency and Bankruptcy

Supply of authenticated copies of the Liquidation and Fair Valuation Reports - Section 33(2) of the Insolvency and Bankruptcy Code - HELD THAT - The confidentiality of the fair and liquidation value of the assets of the Corporate Debtor (CD) is of paramount importance. In the instant case there is no resolution plan and as already indicated the Committee of Creditors have voted for liquidation of the Company. At this juncture it would be inappropriate and unfair to disclose the fair value and liquidation valuation of the assets of the Company to any one including its Directors/Guarantors. In any view of the matter, in case the Company goes into the liquidation the fair value and liquidation value of the company would be taken into consideration by the liquidator under Regulation 35 of the Regulations and at that time the parties interested may consider the valuation and take steps for augmenting the liquidation value, if any. Application dismissed.

Summary

Issues:
1. Application filed under Corporate Insolvency Resolution Process seeking direction for supply of authenticated copies of Liquidation and Fair Valuation Reports.
2. Contention regarding access to valuation reports by promoters of the Company under CIRP.
3. Objection by Resolution Professional to the Application.
4. Interpretation of Section 35 of the Insolvency and Bankruptcy Code and relevant regulations.
5. Confidentiality of fair and liquidation value of assets of the Corporate Debtor.
6. Application rejected due to absence of resolution plan and Committee of Creditors' decision for liquidation.

Analysis:
1. The Application was filed by a Director and Shareholder of the Company under CIRP seeking the Resolution Professional to provide authenticated copies of the Liquidation and Fair Valuation Reports. The Applicant argued that access to these reports is crucial for assessing debt value, especially for guarantors like the Applicant. The Applicant contended that without this information, they would not be able to evaluate the propriety of the valuation and its compliance with the Code guidelines. The Applicant relied on legal precedent to support their claim.

2. The Resolution Professional objected to the Application but did not submit a written counter. The Applicant highlighted the importance of having access to the valuation reports to understand the impact on guarantors and assess the fairness of the valuation process. The Resolution Professional's objection was noted but not substantiated with a written response.

3. The Tribunal referred to Section 35 of the Insolvency and Bankruptcy Code and relevant regulations, emphasizing the confidentiality of fair and liquidation values of the Corporate Debtor's assets. The Tribunal underscored the importance of maintaining confidentiality in such matters to prevent undue gain or loss to any party involved.

4. Citing a Supreme Court judgment, the Tribunal emphasized that fair valuation and liquidation value should be provided to the Committee members only after the receipt of a Resolution Plan. Since the Committee of Creditors had already voted for liquidation in this case, disclosing these values at this stage would be inappropriate. The Tribunal highlighted that parties could consider valuation during liquidation proceedings.

5. Ultimately, the Tribunal rejected the Application, stating that without a resolution plan and with the decision for liquidation already made by the Committee of Creditors, disclosing fair and liquidation values prematurely would serve no purpose. The Tribunal concluded that the Application lacked merit at this stage and was therefore rejected.

In conclusion, the Tribunal's decision was based on the procedural aspects outlined in the Code and regulations, emphasizing the need for confidentiality and proper timing for disclosing valuation information in insolvency proceedings.