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2019 (12) TMI 1578 - Tri - Insolvency and BankruptcyLiquidation of the Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 33(2) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is evident that no resolution plan has come because no Expression of Interest was issued by the Resolution Professional for the reasons aforementioned. However, since the CoC has taken a decision for liquidation of the company, the same being permitted and explicitly stated u/s. 33(2) of the Code as amended on 16.08.2019 since the CoC has already passed resolution for liquidation of the Corporate Debtor with 73.44% voting share on 18.10.2019, the liquidation order is passed. Application allowed.
Issues involved:
Liquidation process under the Insolvency and Bankruptcy Code, 2016 based on CoC resolution, valuation of the corporate debtor's assets, replacement of the Interim Resolution Professional, impediments in determining the company's valuation due to property ownership issues, conduct of CoC meetings, forensic audit decision, extension of CIRP period, failure of funds to materialize, direction to provide information by Suspended-Directors, liquidation order, appointment of Liquidator, cessation of powers of existing management, payment of fees to the Liquidator, prohibition on legal proceedings without approval, discharge notice to employees, functions of the Liquidator. Detailed Analysis: The judgment pertains to an application for liquidation of the Corporate Debtor under the Insolvency and Bankruptcy Code, 2016, filed by the Resolution Professional based on a CoC resolution. The case involved the replacement of the Interim Resolution Professional with a Resolution Professional due to lack of information provided by the Promoter-Directors. The valuation of the company's assets was hindered by property ownership issues raised by a CoC member, affecting the determination of the liquidation value. The Resolution Professional conducted several CoC meetings to address valuation and forensic audit matters, but faced delays due to information gaps from the Suspended-Directors. Despite assurances of fund inflow from various sources to avoid liquidation, no payments materialized, leading to the CoC passing a resolution for liquidation as per the IBC provisions. The CIRP period was extended, but with no funds forthcoming, liquidation became inevitable. The Suspended-Directors failed to fulfill their undertaking to pay the Financial Creditor within the stipulated time, prompting the Bench to expedite the liquidation process by directing the Suspended-Directors to provide necessary information promptly. As no resolution plan was proposed, the CoC's decision for liquidation with a significant voting share was upheld, leading to the issuance of a liquidation order. The order directed the Corporate Debtor to be liquidated as per the IBC provisions, appointing the Resolution Professional as the Liquidator. The existing management's powers ceased, and the Liquidator was tasked with managing the affairs and charging fees as per regulations. Legal proceedings against the Corporate Debtor were restricted without prior approval, and a discharge notice was issued to employees, except in cases where business continuity was necessary during liquidation. The Liquidator was instructed to fulfill duties in line with the IBC and related regulations. The Registry was directed to communicate the order to relevant parties promptly, and the application for liquidation was allowed, concluding the judgment.
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