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2018 (5) TMI 459 - Tri - Insolvency and BankruptcyInitiating of insolvency resolution process - Committee decided with 100% votes that the resolution process of the corporate debtor hereby fails and committee resolved for liquidation of the corporate debtor - replacement of resolution professional by the Committee of Creditors - Held that - Committee of Creditors has unequivocally decided that the corporate debtor be liquidated. The resolution professional intimated the Adjudicating Authority in this regard vide his final report dated 22.01.2018 (Diary No.233 dated 22.01.2018). In view of these circumstances, the corporate debtor is to be liquidated in the manner laid down in Chapter III of the Code. The further resolutions clearly bring out that all the members of the committee of creditors resolved to replace and not to go ahead with the existing resolution professional Shri Amit Sharma for liquidation process. The resolution was also for taking fresh consent from another registered insolvency professional to act as liquidator. In these circumstances, the replacement of the resolution professional is not being sought for the corporate insolvency resolution process. Section 27 of the Code is therefore not applicable. The request for replacement of the resolution professional for acting as liquidator cannot be accepted. The conditions prescribed by Section 34(4) of the Code for replacement of resolution professional are not satisfied in the present case in as much as no resolution plan has been submitted by the resolution professional under section 30 and therefore, its rejection for failure to meet the requirements mentioned in Section 30(2) of the Code does not arise and neither has the Board recommended the replacement of resolution professional to the Adjudicating Authority. We pass the order requiring the corporate debtor M/s Tirupati Ceramics Ltd. to be liquidated and appoint Shri Amit Sharma, resolution professional as the liquidator for the purposes of liquidation. The Liquidator shall publish public announcement in accordance with Regulation 12 of the IBBI (Liquidation Process) Regulations, 2016 and in Form B of Schedule II of these Regulations within five days from today calling upon the stakeholders to submit their claims as on liquidation commencement date and provide the last date for submission of claim which shall be 30 days from the liquidation commencement date. The liquidator shall exercise the powers and perform the duties as prescribed under various provisions and the Code, Regulations and the applicable Rules.
Issues Involved:
1. Replacement of the Resolution Professional. 2. Liquidation of the Corporate Debtor. 3. Appointment of Liquidator. 4. Publication of Public Announcement. 5. Legal Proceedings and Powers during Liquidation. Issue-wise Detailed Analysis: 1. Replacement of the Resolution Professional: The financial creditors of the Corporate Debtor filed an application proposing the replacement of the existing Resolution Professional, Mr. Amit Sharma, with Mr. Punkaj Jain. The Committee of Creditors (CoC) decided with 100% votes to replace Mr. Amit Sharma and proposed Mr. Punkaj Jain as the new Resolution Professional. However, the Tribunal noted that Section 27 of the Insolvency and Bankruptcy Code, 2016 (the Code) allows for the replacement of a Resolution Professional during the Corporate Insolvency Resolution Process (CIRP) but does not apply to the liquidation process. The conditions under Section 34(4) for replacing the Resolution Professional were not satisfied, as no resolution plan had been submitted and rejected, and there was no recommendation from the Board for replacement. 2. Liquidation of the Corporate Debtor: The CoC resolved unanimously to liquidate the Corporate Debtor, M/s Tirupati Ceramics Ltd., as the resolution process had failed. The Resolution Professional had intimated the Adjudicating Authority about the CoC's decision to liquidate the Corporate Debtor. The Tribunal referred to Section 33 of the Code, which mandates the Adjudicating Authority to pass a liquidation order if the CoC decides to liquidate the Corporate Debtor before the confirmation of a resolution plan. 3. Appointment of Liquidator: The Tribunal ordered that Mr. Amit Sharma, the existing Resolution Professional, would act as the Liquidator for the liquidation process, as per Section 34(1) of the Code. The request to replace Mr. Amit Sharma with Mr. Punkaj Jain was not accepted since the conditions for replacement under Section 34(4) were not met. 4. Publication of Public Announcement: The Liquidator was directed to publish a public announcement in accordance with Regulation 12 of the IBBI (Liquidation Process) Regulations, 2016, within five days. The announcement should call upon stakeholders to submit their claims within 30 days from the liquidation commencement date. The announcement must be published in one English and one regional language newspaper with wide circulation at the location of the registered office and principal office of the Corporate Debtor, on the Corporate Debtor's website, and on the website designated by the Board. 5. Legal Proceedings and Powers during Liquidation: The Tribunal directed that no suit or other legal proceedings shall be instituted against the Corporate Debtor, except by the Liquidator with prior approval of the Adjudicating Authority, as per Section 33(5) of the Code. The order for liquidation would serve as a notice of discharge to the officers, employees, and workmen of the Corporate Debtor, except when the business is continued during the liquidation process by the Liquidator. All powers of the Board of Directors, key managerial personnel, and partners of the Corporate Debtor would cease and vest in the Liquidator. The personnel of the Corporate Debtor were directed to extend all assistance and cooperation to the Liquidator. Additional Directions: - The Liquidator was instructed to exercise powers and perform duties as prescribed under the Code, Regulations, and applicable Rules. - The Liquidator must file a preliminary report within 75 days and regular progress reports every fortnight thereafter, as per Regulation 13 of the Liquidation Process Regulations, 2016. - Financial Creditors are not debarred from enforcing corporate and personal guarantees. Conclusion: The Tribunal ordered the liquidation of M/s Tirupati Ceramics Ltd. and appointed Mr. Amit Sharma as the Liquidator. The Liquidator was directed to publish a public announcement and manage the liquidation process as per the Code and applicable regulations. The request to replace the Resolution Professional was denied due to non-fulfillment of the conditions under Section 34(4) of the Code.
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