2019 (7) TMI 1839 - Tri - Insolvency and Bankruptcy

Seeking Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - Prima facie perusal of the form as well as documents annexed therewith show that the disposal of the assets as tabulated here in above has been done in the near proximity of the initiation of the CIRP by this Tribunal on 27.8.2018. However, in the absence of any reply being on record as this application seems to have been filed only on 23.3.2019 and as mentioned on 8.5.2019 wherein it is evident that notice was directed to be issued to the respondent of which no proof has till now been furnished by the RP, the liquidator appointed is directed to proceed with the application in the right earnest. From the records, it is seer that at the time of rejection of the resolution plan on 14.2.2019 by 100% votes cast against the resolution authority has also been given to the RP to do all acts, deeds as necessary to give effect to the rejection of the resolution plan. Since the resolution plan has been rejected by the COC based on the commercial considerations and no further resolution plan has been received on or before the expiry of the CIRP period, taking into consideration the provisions of Section 33 of IBC,2016, this Tribunal orders for the liquidation of the CD. Application allowed.

Summary

Issues involved:
1. Application for liquidation of Corporate Debtor under Sections 33(2) and 33 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).
2. Opposition to liquidation application by erstwhile management.
3. Applications by Operational Creditors against rejection of claims.
4. Application under Section 66 and other relevant provisions of IBC, 2016 regarding fraudulent transfers.
5. Appointment of liquidator and related directions.

Issue 1: Application for liquidation of Corporate Debtor
The Resolution Professional filed an application seeking liquidation of the Corporate Debtor (CD) under Sections 33(2) and 33 of the IBC, 2016. The Corporate Insolvency Resolution Process (CIRP) was initiated for the CD, and after several meetings of the Committee of Creditors (COC), the resolution plan was rejected based on commercial considerations. The liabilities of the CD far exceeded the available assets, indicating insolvency. Consequently, the Tribunal ordered the liquidation of the CD as no further resolution plan was received within the stipulated period, in accordance with Section 33 of the IBC, 2016.

Issue 2: Opposition to liquidation application by erstwhile management
The erstwhile management of the CD opposed the liquidation application, having previously submitted a resolution plan that was rejected by the COC. Additionally, Operational Creditors filed applications against the rejection of their claims. The Tribunal noted the claims made by the Operational Creditors, which arose from rental arrears and supply of goods, respectively. However, since the CD was ordered for liquidation, the Liquidator would handle these claims and defend any related suits before the courts.

Issue 3: Applications by Operational Creditors against rejection of claims
Operational Creditors filed applications against the rejection of their claims by the Resolution Professional. The claims related to rental arrears and supply of goods, with the Operational Creditors having initiated separate suits before the Civil Courts prior to the CIRP. The Tribunal directed the Liquidator to address these claims and take necessary actions as per the provisions of the IBC, 2016.

Issue 4: Application under Section 66 and other relevant provisions of IBC, 2016 regarding fraudulent transfers
An application was filed under Section 66 and other relevant provisions of the IBC, 2016, highlighting fraudulent transfers by the erstwhile management of the CD. The application detailed transactions made without the consent of financial creditors, indicating potential wrongful actions. The Tribunal directed the Liquidator to investigate these transactions and proceed with the application promptly.

Issue 5: Appointment of liquidator and related directions
The Resolution Professional expressed unwillingness to act as the liquidator due to pre-occupation, leading to the appointment of a new liquidator. The newly appointed liquidator was directed to adhere to the provisions of the IBC, 2016, issue a public announcement of liquidation, investigate financial affairs, and comply with regulatory requirements. The Tribunal provided detailed directions for the liquidator's actions, including submitting preliminary reports and communicating with relevant authorities.

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