2018 (4) TMI 272 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Held that - There are sufficient and convincing reasons for initiation of liquidation process under Section 33 of the Insolvency and Bankruptcy Code, 2016. By considering the above stated provision u/s 33(1)(2), the present petition and the reasons mentioned therein its present petition deserve to be allowed

Summary

Issues:
Liquidation order sought by Resolution Professional under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 due to failure of resolution plan materialization within prescribed time.

Analysis:
The application filed by the Resolution Professional of the Corporate Debtor sought an order of liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016. The Committee of Creditors approved the liquidation as the resolution plan could not be materialized within the stipulated 270 days. The Interim Resolution Professional was appointed initially, and later confirmed as the Resolution Professional by the Committee of Creditors.

The Resolution Professional initiated the Corporate Insolvency Resolution Process by causing a public announcement and inviting creditors to submit claims. Only one claim was received from a financial creditor, Union Bank of India. The Committee of Creditors confirmed the appointment of the Resolution Professional in its meetings and requested the submission of a resolution plan, which was later revised.

However, due to rejection of the resolution plan by Union Bank of India and subsequent rejection by the Committee of Creditors in a later meeting, the liquidation process was deemed necessary. The Central Government's amendment ordinance further complicated the resolution process, leading to the rejection of a subsequent resolution plan and the decision to initiate liquidation.

The Tribunal, after hearing submissions from the Resolution Professional and the Committee of Creditors, found sufficient reasons to initiate the liquidation process under Section 33 of the Insolvency and Bankruptcy Code, 2016. The Tribunal allowed the application and issued directions for the appointment of the Resolution Professional as the Liquidator, payment of fees, cessation of powers of the corporate debtor's management, cooperation with the Liquidator, public announcement of liquidation, and continuation of the moratorium.

The Tribunal's order detailed the powers and duties of the Liquidator, continuation of the moratorium until the disposal of the application, and the cessation of the previous moratorium order. It also specified the initiation of a fresh moratorium, restrictions on legal proceedings, continuation of the Resolution Professional's role, discharge of the corporate debtor's personnel, incurring of expenditure by the Committee of Creditors for the liquidation process, and the communication of the order to relevant authorities.