2020 (3) TMI 1265 - Tri - IBC

Liquidation of the Corporate Debtor - section 33(1), 33(2) and 33(3) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - CoC does not wish to continue the CIRP process and therefore, the CoC has resolved for liquidation of the Corporate Debtor vide its Ninth meeting dated 13.11.2019. It is also to be noted that this Adjudicating Authority has no jurisdiction to interfere in the commercial wisdom of the CoC as observed in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT . The Corporate Debtor is allowed to be liquidated - moratorium cease to have effect.

Summary

Issues: Liquidation of Corporate Debtor under Insolvency and Bankruptcy Code, 2016

Issue 1: Application for Liquidation
The Resolution Professional (RP) filed IA No. 58 of 2020 seeking liquidation of the Corporate Debtor under sections 33(1), 33(2), and 33(3) of the Insolvency and Bankruptcy Code, 2016 (IB Code). The CoC decided to waive the requirement of issuing an Expression of Interest due to the Corporate Debtor's financial position, lack of business operations, absence of assets or employees, and low possibility of finding buyers. Subsequently, the CoC passed a resolution for liquidation with 94.51% voting, leading to the RP filing an application for liquidation as per the IB Code.

Issue 2: Adjudication and Order
The Adjudicating Authority found that the CoC decided to opt for liquidation over continuing the Corporate Insolvency Resolution Process (CIRP) due to commercial reasons. The authority cited precedents, including the Supreme Court's judgment, emphasizing that it cannot interfere with the commercial wisdom of the CoC. Consequently, the authority passed orders including cessation of moratorium, public announcement of liquidation, and transfer of powers to the Liquidator. It also directed no new legal proceedings against the Corporate Debtor except with the Liquidator's approval and specified the Liquidator's duties and powers under the IB Code.

Issue 3: Liquidation Process
The order directed the Liquidator to manage the affairs of the Corporate Debtor, communicate the liquidation to relevant authorities, charge fees as specified, and receive assistance from the Corporate Debtor's personnel. The Liquidator was empowered with the duties and powers outlined in the IB Code and associated regulations. The order also clarified the cessation of powers of the Corporate Debtor's management, with the Liquidator taking over, and notified the concerned parties for compliance with the order.

In conclusion, the Adjudicating Authority allowed the RP's application for liquidation, appointing the RP as the Liquidator for the purpose of liquidating the Corporate Debtor. The IA was disposed of with the specified observations and directions for the liquidation process.