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2018 (12) TMI 1902 - Tri - Insolvency and BankruptcyLiquidation of the Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 (in short, 1 B Code, 2016) read with Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT - It is stated by the Resolution Professional that in the final Meeting of the CoCs held on 02.05.2018, the CoC has made discussion and deliberation regarding the viability of a revival of the Corporate Debtor and found the same to be negative since the Corporate Debtor which is an Aviation Company, neither had an Aircraft nor a License from DGCA and under such circumstance, pumping of investment towards hiring an Aircraft was commercially unviable. Therefore, the CoCs unanimously has passed a Resolution inter-alia for Liquidation of the Corporate Debtor. The CoC has agreed to the request of one of the suspended Directors of the Corporate Debtor and conveyed its decision to liquidate the Corporate Debtor by duly including and treating the land owned by the personal guarantors and mortgaged to the Financial Creditor as an asset vested with the Corporate Debtor. This authority orders for liquidation of the Corporate Debtor viz., M/s. Air Carnival Private Limited. - Application allowed.
Issues:
Liquidation of Corporate Debtor under Insolvency and Bankruptcy Code, 2016. Issue 1: Liquidation Application The Resolution Professional filed an application under Section 33(2) of the Insolvency and Bankruptcy Code, 2016, seeking an Order of Liquidation for the Corporate Debtor, M/s. Air Carnival Private Limited. The Operational Creditor had initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for an outstanding debt amount. Issue 2: Resolution Process After the admission of the CIRP application, the Interim Resolution Professional took over the management of the Corporate Debtor. The Committee of Creditors (CoC) was constituted, and in subsequent meetings, the Resolution Professional was appointed. The CoC found the asset value of the Corporate Debtor insufficient to cover the outstanding debt, leading to discussions on the viability of revival or liquidation. Issue 3: Decision for Liquidation The CoC, after evaluating the circumstances and the inability to find a prospective investor for revival, passed a resolution for the liquidation of the Corporate Debtor. The CoC agreed to include the land owned by personal guarantors and mortgaged to the Financial Creditor as part of the liquidation asset. Issue 4: Order of Liquidation Based on the Resolution Professional's submissions and the CoC's resolutions, the Authority ordered the liquidation of M/s. Air Carnival Private Limited. The Resolution Professional was appointed as the Company Liquidator, and the moratorium declared under Section 14 of the I&B Code ceased to have effect from the date of the order. Issue 5: Legal Proceedings and Liquidation Process The Order specified that no suit or legal proceedings could be instituted against the Corporate Debtor, except by the Liquidator with prior approval. The Liquidator was granted powers previously held by the Board of Directors, and the personnel were directed to assist the Liquidator. The Liquidator's fee for conducting the liquidation proceedings was subject to approval by the CoC. Issue 6: Inclusion of Assets The suspended Director/Guarantor consented to include their property as part of the Estate Assets of the Corporate Debtor for liquidation purposes. The property was deemed to form part of the Estate Assets, and the liquidation proceedings against the Corporate Debtor were disposed of accordingly. This judgment from the National Company Law Tribunal, Chennai, involved the liquidation of M/s. Air Carnival Private Limited following the CoC's decision due to the unviability of revival and lack of assets to cover outstanding debts. The Resolution Professional's application for liquidation was granted, appointing them as the Company Liquidator. The order outlined the cessation of moratorium, transfer of powers to the Liquidator, and inclusion of assets for liquidation. The decision emphasized the need for liquidation over revival based on the Corporate Debtor's circumstances.
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