2018 (7) TMI 2250 - AT - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - Section 33(2) of the Insolvency Bankruptcy Code 2016 - HELD THAT - There was no resolution applicant who came forward to file a Resolution Plan . The Committee of Creditors in its meeting held on 31st August 2017 asked the Resolution Professional to come forward with concrete proposal for revival of the company as otherwise they will have to consider the question of liquidating the company. Thereafter in absence of resolution plan the Committee of Creditors decided to go ahead with the liquidation of the company. The appeal is dismissed.

Summary

Issues: Challenge to order for liquidation under Section 33(2) of the Insolvency & Bankruptcy Code, 2016.

The judgment pertains to a challenge against an order for liquidation passed by the Adjudicating Authority under Section 33(2) of the Insolvency & Bankruptcy Code, 2016. The appellant, a promoter of a Corporate Debtor, contested the order, arguing that the matter was closed prematurely by the Committee of Creditors without allowing the completion of the stipulated 180 days for the resolution process. The Committee of Creditors had decided to proceed with liquidation as no resolution applicant had come forward with a plan for revival. The appellant, although capable of submitting a Resolution Plan, was deemed ineligible under Section 29A, leading to the dismissal of the claim. The Tribunal found no merit in the appellant's grievance and upheld the order for liquidation, ultimately dismissing the appeal without costs.

The key contention raised by the appellant was the premature closure of the resolution process by the Committee of Creditors before the completion of the 180-day period. The appellant argued that the Committee's decision to opt for liquidation was hasty, especially considering the absence of any resolution applicant presenting a concrete plan for revival. However, the Tribunal noted that the Committee had given ample opportunity for the submission of a Resolution Plan, even directing the Resolution Professional to provide a proposal for revival. Despite the appellant's potential to submit a plan, their ineligibility under Section 29A rendered their claim unacceptable, leading to the Committee's decision to proceed with liquidation.

The Tribunal's analysis focused on the procedural adherence to the Insolvency & Bankruptcy Code, particularly in terms of the timeline for resolution and the eligibility criteria for submitting a Resolution Plan. The Tribunal emphasized that the decision to move towards liquidation was based on the lack of viable alternatives due to the absence of a Resolution Plan from any eligible applicant. The Tribunal found no justification to intervene in the Committee's decision, ultimately affirming the order for liquidation and dismissing the appeal.