2022 (1) TMI 1370 - Tri - Insolvency and Bankruptcy

Seeking liquidation of Corporate Debtor - no resolution plan submitted before the Adjudicating Authority by the Resolution Professional - HELD THAT - This Bench is satisfied with the reasons that the only Resolution Plan received from the promoter of Corporate Debtor was rejected as the Corporate Debtor was declared as willful defaulter the ground that no major assets are left in the company and lastly that COC with 100% voting has approved to liquidate the Corporate Debtor this bench allows the IA No. 173 of 2021 and orders liquidation of Corporate Debtor. On reading the Application and the documents enclosed therein for the RP has complied with the procedure laid under the Code read with Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 (Regulations) this is believed to be a case fit to pass liquidation order under sub-section 1 of section 33 of the Code as no resolution plan has been submitted before the Adjudicating Authority by the Resolution Professional. It is directed that the Corporate Debtor to be liquidated in the manner as laid down in the Chapter by issuing Public Notice stating that the Corporate Debtor is in liquidation with a direction to the Liquidator to send this order to the ROC under which this Company has been registered - application allowed.

Summary

Issues:
1. Application for liquidation of Corporate Debtor
2. Consideration of resolution plan by COC
3. Eligibility of Resolution Applicant under Section 29A of IBC
4. Approval for liquidation by COC
5. Appointment of Liquidator
6. Powers and responsibilities of Liquidator post liquidation

Issue 1: Application for liquidation of Corporate Debtor
The Resolution Professional filed an application seeking the liquidation of the Corporate Debtor after the completion of the Corporate Insolvency Resolution Process (CIRP). The CIRP period was extended due to a lockdown imposed by the Central Government, and as no resolution plans were received except one from the promoter, which was rejected by the Committee of Creditors (COC), the COC members resolved in favor of liquidation.

Issue 2: Consideration of resolution plan by COC
The COC meetings discussed the resolution plan submitted by the promoter, Mr. Jaidev Panchmatia. Despite the plan being presented for consideration, it was rejected by the COC members. The COC approved the liquidation of the Corporate Debtor with 100% votes, as recommended by the Union Bank of India due to the classification of the Corporate Debtor as a fraud and willful defaulter.

Issue 3: Eligibility of Resolution Applicant under Section 29A of IBC
During the COC meetings, concerns were raised regarding the eligibility of the Resolution Applicant, Mr. Jaidev Panchmatia, as a connected person under Section 29A of the Insolvency and Bankruptcy Code, 2016. The Union Bank of India classified the Corporate Debtor as a fraud and willful defaulter, leading to the rejection of the resolution plan submitted by Mr. Jaidev Panchmatia.

Issue 4: Approval for liquidation by COC
The COC, in its Eighth meeting, approved the liquidation of the Corporate Debtor with 100% votes. The Resolution Professional was proposed to be the Liquidator, and the necessary steps were authorized to be taken to file the liquidation application with the NCLT Mumbai Bench. The decision for liquidation was based on factors such as the rejection of the only received resolution plan, the classification of the Corporate Debtor as a willful defaulter, and the absence of significant assets in the company.

Issue 5: Appointment of Liquidator
The Resolution Professional was appointed as the Liquidator of the Corporate Debtor as per Section 34(1) of the Insolvency and Bankruptcy Code. The Liquidator was authorized to manage the liquidation process, with all powers of the Board of Directors, key managerial persons, and partners of the Corporate Debtor ceasing to exist and vesting with the Liquidator.

Issue 6: Powers and responsibilities of Liquidator post liquidation
Post liquidation, the Liquidator was directed to issue a Public Notice stating the liquidation of the Corporate Debtor and send the order to the Registrar of Companies. The Liquidator was tasked with managing the liquidation proceedings, charging fees proportionate to the value of the liquidation estate assets, and initiating legal proceedings on behalf of the Corporate Debtor with prior approval of the Adjudicating Authority.

This detailed analysis of the judgment highlights the key issues addressed by the National Company Law Tribunal, Mumbai, leading to the liquidation of the Corporate Debtor based on the COC's decision and compliance with the Insolvency and Bankruptcy Code.