2018 (11) TMI 1923 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - Rejection of proposal of the Resolution Professional for extension of the CIRP period by 73.3% vote share - preferential transaction - HELD THAT - COC by a majority vote share has decided not to proceed further with the CIRP process for want of any prospective resolution applicant to the satisfaction of the COC, and decided to go for liquidation. The Resolution Professional in the case in hand, duly conducted the process with utmost care and caution and he observed that the Corporate Debtor Company has got a good factory. However, as the COC did not opt for proceeding further, he was forced to file the Final Progress Report recommending passing an order of liquidation. The Ld. Resolution Professional also submits that an application was filed u/s. 43 and 45 of the I B Code alleging preferential transaction to the tune of Rs. 41 Crores as a corporate lone taken from Mr. Madhu Dalmia and refunded before the maturity period. According to him, the above said amount is to be refunded as it is a preferential transaction and to be deposited in the account of the Corporate Debtor. Liquidation order is passed - Mr. Kannan Tiruvengadam is appointed as Liquidator - Mr. Kannan Tiruvengadam is directed to issue Public Announcement stating that the Corporate Debtor is in liquidation, in tens of Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - application allowed.

Summary

Issues: Application for Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016; Rejection of extension of CIRP period by Committee of Creditors; Appointment of Liquidator; Allegation of preferential transaction; Payment of fees to Resolution Professional.

Corporate Insolvency Resolution Process (CIRP): The judgment pertains to an application filed by an Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. The application was admitted, and an Interim Resolution Professional was appointed. Despite efforts to find a resolution applicant, no plan was received. The Committee of Creditors rejected the proposal for extension of CIRP period, leading to the decision for liquidation.

Appointment of Liquidator: The Resolution Professional expressed his unwillingness to continue as Liquidator due to age, prompting the COC to propose another Insolvency Professional as the Liquidator, subject to approval. The judgment appointed this proposed individual as the Liquidator and outlined various directions for the liquidation process, including issuing a Public Announcement, communicating with regulatory authorities, and submitting reports within specified timelines.

Allegation of Preferential Transaction: The Resolution Professional alleged a preferential transaction involving a substantial amount, seeking its reversal and deposit into the Corporate Debtor's account. The judgment acknowledged this claim and directed further proceedings against the Directors of the suspended Board of Directors regarding the alleged preferential transactions and under-value transactions.

Payment of Fees to Resolution Professional: The Resolution Professional highlighted non-payment of his fees and costs despite approval by the COC, leading to a request for direction to the COC to settle the outstanding amount. The judgment directed the financial creditors/COC to pay the approved fees and costs to the outgoing Resolution Professional promptly, emphasizing the importance of timely payment to avoid economic loss and inconveniences.

Dismissal of Related Application: Another application filed under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 by the Resolution Professional seeking directions to the directors of the suspended Board of Directors was dismissed as the order of liquidation had been passed, rendering the prayer in the application moot. The judgment concluded that the application required no further consideration in light of the liquidation order.