2019 (7) TMI 1906 - AT - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It appears that there was no specific prohibition on the 'Committee of Creditors' for considering one or other 'Resolution Plan'. They held meeting after the first order of the Hon'ble High Court of Judicature for Rajasthan, Bench at Jaipur, i.e. on Company Appeal (AT) (Insolvency) No. 282 of 2019 27th September, 2018 and on different dates i.e. 8th October, 2018, 22nd October, 2018, 30th October, 2018, 6th November, 2018, 10th December, 2018 and 18th January, 2019. The 'Resolution Plan' of the Appellant as was placed was not accepted - no case is made out for exclusion of any of the period for the purpose of counting 270 days which stands completed on passing the impugned order of liquidation. Appeal disposed off.

Summary

Issues:
1. Appeal against the order of liquidation under the Insolvency and Bankruptcy Code, 2016.
2. Consideration of exclusion of a specific period for re-considering a revised Resolution Plan.
3. Disagreement among creditors regarding the exclusion of the period for re-consideration.
4. Committee of Creditors' decision for liquidation despite the possibility of re-considering a revised plan.
5. Interpretation of High Court orders regarding the Resolution Process.
6. Acceptance of the Resolution Plan by the Committee of Creditors.
7. Exclusion of any period for counting the 270-day timeline.
8. Directions for the Liquidator post-liquidation order.

Analysis:
1. The appeal was filed against the liquidation order of a Corporate Debtor. The Appellant argued that a revised Resolution Plan could have been re-considered if a specific period, excluded due to a High Court order, was not counted towards the 270-day timeline as required under the I&B Code.

2. The Financial Creditors were agreeable to re-consider the revised plan if the excluded period was not counted. However, other parties such as the Stressed Assets Stabilization Fund and certain banks opposed this proposition, leading to a disagreement among the creditors.

3. Despite the Committee of Creditors' decision to proceed with liquidation, some creditors advocated for the exclusion of the period to re-evaluate the revised plan submitted by the Appellant, just before the 270-day deadline.

4. The Tribunal examined the High Court orders related to the Resolution Process and noted that there was no specific prohibition on the Committee of Creditors to consider Resolution Plans during the relevant period, leading to meetings and discussions regarding the same.

5. Ultimately, the Tribunal found that there was no justification for excluding any period from the 270-day timeline, which had already expired at the time of the liquidation order. The Tribunal emphasized the need for the Liquidator to follow the provisions of the I&B Code and the Companies Act post-liquidation.

6. The Tribunal directed the Liquidator to ensure the Corporate Debtor remains a going concern during liquidation and explore the possibility of selling the company as a going concern if no Scheme is approved under the Companies Act. It also highlighted the importance of considering Resolution Plans that maximize assets and balance stakeholders' interests.

7. The Tribunal clarified that the decision on which Resolution Plan to consider lies with the creditors and members of the Corporate Debtor in consultation with the Liquidator, emphasizing the importance of adhering to the objectives of the I&B Code.

8. In conclusion, the appeal was disposed of, providing guidance on the post-liquidation process and the considerations to be taken into account by the Liquidator and creditors moving forward.