2019 (11) TMI 1763 - Tri - Insolvency and Bankruptcy

Liquidation of the corporate debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is pertinent to refer to the statutory provisions provided in Section 33 (2) of the Code which envisages that where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors (approved by not less than sixty-six percent of the voting share) to liquidated the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub- clauses (i), (ii) and (iii) of clause (b) of sub-section(1) - upon failure of resolution process there being no approved resolution plan by Committee of Creditors, liquidation has to follow as recommended by the Committee of Creditors. Adherence to statutory requirement has to be in toto. When the language of the Code is clear and explicit the Adjudicating Authority must give effect to it whatever may be the consequences. In the factual background and in the absence of any approved resolution plan and for want of time beyond statutory CIRP period; there is no other alternative left but to order in conformity with the decision of the Committee of Creditors with loo % voting share, for liquidation of the corporate debtor under Section 33 of the Code. Application allowed.

Summary

Issues:
1. Application for liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The Resolution Professional (RP) filed an application for liquidation of the corporate debtor, M/s Case Cold Roll Forming Limited, under Section 33(2) of the Code. The application was a result of the financial creditor, Oriental Bank of Commerce, initiating Corporate Insolvency Resolution Process against the corporate debtor. The Interim Resolution Professional was appointed, and the Committee of Creditors was constituted as per the Code.

In compliance with regulations, the Interim Resolution Professional appointed valuers to determine Fair Value and Liquidation value. Despite efforts to invite resolution applicants and extend timelines, only one Expression of Interest (EOI) was received, which did not meet the requirements. Subsequently, revised forms were published, leading to three expressions of interest from prospective resolution applicants.

After multiple meetings and considerations, the Committee of Creditors rejected the resolution plan submitted by Jatalia Global Ventures Private Limited with a conditional clause. The rejection was followed by discussions and the decision to liquidate the corporate debtor due to the lack of a viable plan and no other interested resolution applicants.

The decision for liquidation was supported by the RP and approved by the Committee of Creditors with 100% voting share. Respondent No. 2, a suspended director, objected, arguing that the resolution applicant's offer exceeded the liquidation value. However, the Committee's decision was upheld, emphasizing the absence of an approved/viable resolution plan, leading to the liquidation order.

The Tribunal highlighted the statutory provisions and the discretion of the Committee of Creditors in accepting or rejecting resolution plans. With no approved plan, liquidation was deemed necessary, adhering to the Code's requirements. The RP's application for liquidation was allowed, appointing a Liquidator and issuing necessary directions for the liquidation process.

The Liquidator was directed to ensure the corporate debtor remains a going concern, investigate financial affairs, handle pending applications, and submit reports within specified timelines. The order was communicated to relevant parties, marking the commencement of the liquidation process.

This detailed analysis encapsulates the legal proceedings and decisions leading to the liquidation order for M/s Case Cold Roll Forming Limited under the Insolvency and Bankruptcy Code, 2016.