2018 (12) TMI 1049 - Tri - Insolvency and Bankruptcy

Initiating Corporate Insolvency Resolution Process - COC rejected the draft proposal received by RP from promoters - Held that - In the light of the facts and circumstances stated in the Application filed by the RP, this Adjudicating Authority in exercise of powers conferred under Section 33(1)(a) of the I&B Code, 2016, proceed to pass the following order we order for liquidation of the Corporate Debtor viz., M/s. Jain Granites & Projects India Limited, which shall be conducted in the manner as laid down in Chapter III of part II of the I&B Code, 2016.

Issues involved:
- Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code.
- Approval of valuers' fees and other costs by the Committee of Creditors (COC).
- Consideration of resolution plans and feasibility by the COC.
- Decision on liquidation of the Corporate Debtor.
- Appointment of Liquidator and conduct of liquidation proceedings.

Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed by an Operational Creditor under Section 9 of the Code for initiating CIRP against the Corporate Debtor. The Tribunal appointed an Interim Resolution Professional to carry out the functions as per the Code. Valuers were finalized to do the valuation of assets of the Corporate Debtor, and the fees were approved by the COC.

Approval of valuers' fees and other costs by the COC:
During the COC meetings, various matters were discussed, including approval of valuers' fees, negotiation on costs, settlement of staff salaries, and review of statutory compliances. The COC also agreed to reduce the time period for convening meetings and approved reimbursement of essential costs. Security costs and disposal of stock were deliberated upon, with decisions made based on the financial position of the Corporate Debtor.

Consideration of resolution plans and feasibility by the COC:
The COC reviewed a resolution plan submitted by the promoters, assessing the liabilities and assets of the Corporate Debtor. The COC rejected the plan citing issues with overdue amounts and feasibility. The financial position of the Company was analyzed, leading to a decision to liquidate the Corporate Debtor in the absence of a feasible resolution plan.

Decision on liquidation of the Corporate Debtor:
After multiple meetings and considerations, including the rejection of the promoters' resolution plan, the COC resolved to liquidate the Corporate Debtor due to the significant gap between liabilities and assets. The Tribunal, based on the application filed by the RP, ordered the liquidation of the Corporate Debtor, appointing the RP as the Liquidator to conduct the proceedings as per the I&B Code.

Appointment of Liquidator and conduct of liquidation proceedings:
The Tribunal appointed the RP as the Liquidator, ceasing the moratorium and transferring all powers from the Board of Directors to the Liquidator. The Liquidator was directed to manage the affairs of the Corporate Debtor, charge fees proportionate to the value of assets, and submit progress reports as per regulations. The Operational creditor was directed to incur expenses, to be reimbursed from the proceeds of liquidation.

This detailed analysis covers the key issues involved in the legal judgment delivered by the National Company Law Tribunal, Chennai, leading to the liquidation of the Corporate Debtor.

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