2020 (10) TMI 1283 - Tri - Insolvency and Bankruptcy

Seeking orders for liquidation of the Company/Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It would appear that despite all possible steps as required under the Code taken during the CIRP, the CoC did not receive any viable resolution plan/proposal for revival of the Company. The CoC in its wisdom has resolved with 89.19% voting share in favour of the liquidation of the Company. This Authority has no reason before it to take a contrary view in terms of Section 33(1)(a) of the Code. Therefore, there are no option than to pass an order for liquidation of the Company in the manner laid down in Chapter-III of the Code - Corporate Debtor i.e. Parekh Aluminex shall be liquidated in the manner as laid down in Chapter-III of the Code - application allowed.

Summary

Issues: Liquidation of the Company/Corporate Debtor

Analysis:
The judgment pertains to an Application by the Resolution Professional under Section 33(2) of the Insolvency and Bankruptcy Code, 2016, seeking orders for the liquidation of the Company/Corporate Debtor. The National Company Law Tribunal, Mumbai, admitted the Petition under Section 7 of the Code, initiating the Corporate Insolvency Resolution Process (CIRP) of the Company. The Interim Resolution Professional (IRP) was appointed, and subsequently, the Committee of Creditors (CoC) was constituted. Various meetings were held, and the Resolution Plan of the Resolution Applicant was approved by 73.58% of the CoC members. However, the Resolution Applicant later expressed intent to withdraw the plan, which was opposed by the CoC.

The Tribunal, in a subsequent order, directed the forfeiture of the Earnest Money Deposit (EMD) deposited by the Resolution Applicant upon withdrawal of the Resolution Plan. Despite efforts during the CIRP, no viable resolution plan for the Company's revival was received. The CoC, with 89.19% voting share, resolved in favor of the liquidation of the Company. The Tribunal cited a Supreme Court judgment emphasizing that the NCLT is obligated to initiate the liquidation process under the Code and cannot interfere with the commercial decisions of the CoC.

Accordingly, the Tribunal ordered the liquidation of the Company as per Chapter-III of the Code. The current Resolution Professional (RP) was appointed as the Liquidator, with directions to issue a public announcement, cease the Moratorium, and take over the powers of the Board of Directors. The Liquidator was tasked with managing the affairs of the Corporate Debtor and entitled to specified fees. The Order also discharged officers, employees, and workmen of the Corporate Debtor, except if the business continues during liquidation. Copies of the Order were to be furnished to relevant authorities.