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2019 (5) TMI 1294 - Tri - Insolvency and BankruptcyLiquidation of the corporate debtor - Section 33(1) of the Code - required percentage of the voting share not present - HELD THAT - As per Section 33(2) of the Code, the decision of the COC to liquidate the corporate debtor is required to be approved by not less than 66% of the voting share - In the present case, it is stated that in the second meeting of the COC held on 29.09.2018, only 36.87% of the total voting share of COC were present and unanimously decided for liquidation of the corporate debtor. The decision of the COC to liquidate the corporate debtor does not therefore, have the approval of the required percentage of the voting share. Section 33(1)(a) of the Code inter alia states that where the Adjudicating Authority, before the expiry of the CIRP, does not receive a resolution plan under Section 30(6) of the Code, it shall pass an order requiring the corporate debtor to be liquidated in the manner as laid down in Chapter 3 of the Code - In the present case, no such resolution plan has been received. The corporate debtor to be liquidated in the manner as laid down in Chapter III of the Code. Ratification of expenses and fee of IRP/RP during the CIRP - HELD THAT - So far as the claim with regard to expenses of RP is concerned, the learned counsel for the RP submits that the same would be made part of the liquidation cost or the cost of Corporate Insolvency Resolution Process and therefore, the prayer presently is confined only with regard to the liquidation of the corporate debtor for which the COC has taken a decision on 29.09.2018. In accordance with Regulation 13 of the Liquidation Process Regulations, 2016, the Liquidator shall file his preliminary report within 75 days and to file regular progress reports as per Rule 15 of the Liquidation Process Regulations 2016 every fortnightly thereafter - It is clarified that the Financial Creditors are not debarred from having recourse to enforce the personal guarantees and to take proper steps in this regard. Application disposed off.
Issues:
1. Ratification of expenses incurred by the Interim Resolution Professional during the Corporate Insolvency Resolution Process (CIRP). 2. Seeking liquidation of the corporate debtor pursuant to Section 33(1) of the Code. 3. Replacement of the Resolution Professional. 4. Failure to submit necessary information hindering the completion of the information memorandum. 5. Appointment of a new Insolvency Professional as Liquidator. 6. Compliance with the provisions of Chapter III of the Code and Liquidation Process Regulations, 2016. Issue 1: Ratification of Expenses: The Resolution Professional (RP) filed an application seeking ratification of expenses incurred during the CIRP of the Corporate Debtor. The RP detailed the initiation of CIRP, constitution of the Committee of Creditors (COC), and subsequent events leading to the decision for liquidation. The COC decided on liquidation, and the RP proposed his fee for ratification. The Tribunal noted the expiration of the 180-day CIRP period and the lack of required approval percentage for liquidation by the COC. However, as no resolution plan was received, the Tribunal ordered liquidation in accordance with Section 33(1)(a) of the Code. Issue 2: Replacement of Resolution Professional: The RP faced challenges in completing the information memorandum due to the unavailability of necessary financial documents. Despite efforts to obtain information through legal proceedings, the RP could not proceed with the memorandum. Consequently, the Tribunal ordered the liquidation of the corporate debtor. Furthermore, the RP failed to submit the required written consent to act as Liquidator, leading to the replacement of the RP with a new Insolvency Professional as Liquidator. Issue 3: Appointment of New Insolvency Professional as Liquidator: Following the replacement of the RP, the Tribunal directed the appointment of a new Insolvency Professional as Liquidator. The Board proposed a name from a panel of IPs for the liquidation process. Shri Kuljeet Singh was appointed as the Liquidator for the corporate debtor. The Tribunal emphasized strict compliance with Chapter III of the Code and the Liquidation Process Regulations, 2016, outlining various directions related to legal proceedings, discharge of officers, and cooperation with the Liquidator. Issue 4: Compliance with Regulations: The Tribunal highlighted the importance of complying with the provisions of Chapter III of the Code and the Liquidation Process Regulations, 2016. Directions included restrictions on legal proceedings against the corporate debtor, transfer of powers to the Liquidator, and cooperation with the Liquidator by the personnel of the corporate debtor. The Liquidator was instructed to publish a public announcement, file reports, and ensure compliance with regulatory requirements. This comprehensive summary covers the detailed analysis of the judgment, addressing each issue involved in the legal matter.
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