2020 (1) TMI 1379 - Tri - Insolvency and Bankruptcy

Liquidation of the Company - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - This company petition was admitted on 20.09.2018 by appointing Mr. Gyan Chand Narang as Interim Resolution Professional. Thereafter upon the publication for claim applications, the Resolution Professional having received claims from the Creditors, on collation of claims, the claims in aggregate has come to ₹ 444.60 crores. Thereafter, the same Interim Resolution Professional was confirmed by the COC to continue as Resolution Professional, in pursuance thereof, he appointed two valuers for determination of the liquidation value of the Company, subsequently he determined the liquidation value of the Company as ₹ 119.36 crores based on the average of the valuation given by the two valuers. Upon placing those two plans, since COC felt that those two plans were constituted with a conditional arrangement and not reflecting the value of the Corporate Debtor, the COC has, summarily rejected those two plans not for they are not viable, and passed a resolution on 22.10.2019 for liquidation of the Corporate Debtor with 87.30% voting with a recommendation to appoint same Resolution Professional as Liquidator. The COC has taken an opinion in its commercial wisdom coming to a conclusion that those two plans with conditions are not viable to maximise the value of the assets of the Corporate Debtor, therefore COC has passed a resolution with requisite majority proposing for liquidation of the Company, accordingly liquidation of the company is ordered with the directions imposed - application disposed off.

Summary

Issues: Liquidation application under Section 33(2) of the Insolvency and Bankruptcy Code, 2016

In the judgment delivered by the National Company Law Tribunal, New Delhi, Principal Bench, the case involved a liquidation application filed under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. The application sought the liquidation of the company based on a resolution passed by the Committee of Creditors (COC) with 87.30% majority. The case was initially admitted on 20.09.2018, appointing an Interim Resolution Professional. After receiving claims from creditors totaling ?444.60 crores, the Interim Resolution Professional continued as the Resolution Professional. Valuers were appointed to determine the liquidation value, which was assessed at ?119.36 crores. Fourteen expressions of interest were received, but two plans were rejected by the COC for being conditional and not reflecting the value of the Corporate Debtor. Consequently, the COC passed a resolution on 22.10.2019 for the liquidation of the company with 87.30% voting, recommending the same Resolution Professional as the Liquidator.

The Tribunal acknowledged the commercial wisdom of the COC in rejecting the conditional plans to maximize the value of the assets of the Corporate Debtor. Consequently, the Tribunal ordered the liquidation of the company and appointed Mr. Gyan Chand Narang as the Liquidator. Directions were given for the issuance of a Public Announcement, communication of the Order to relevant authorities, commencement of a fresh Moratorium, and adherence to the liquidation process as per the Code and regulations. The Liquidator was instructed to ensure the corporate debtor remains a going concern, investigate financial affairs, handle pending applications, and submit a Preliminary Report within seventy-five days. The Order was to be communicated to financial creditors, the corporate debtor, and the Liquidator for further action, thus concluding the matter.