2019 (6) TMI 907 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process (CIRP) - process initiated against the Corporate Debtor - Section 7 of the I B Code, 2016 - HELD THAT - The Final Report dated 28.01.2019 filed by the Liquidator provides that during the CIR Process and during Liquidation process, no bank account was opened or operated or maintained and no current account transaction or bank account operation was carried out. It further provides that the Corporate Debtor ceased to do business and the promoters and/or Directors of the Corporate Debtor have not handed over the books of account or provided any material information during the CIR Process and during the proceedings of liquidation. Therefore, the Liquidator could not appoint any valuers in the absence of Financial Records and/or any discoverable assets, as prescribed under the Insolvency and Bankruptcy Code, 2016. This Authority in exercise of the powers conferred under Sub-section (2) of Section 54 of the I B Code, 2016, hereby order the dissolution of the Corporate Debtor, viz., M/s. SKC Retail Limited from the date of this Order, and the Corporate Debtor stands dissolved. Consequently, the Liquidator stands relived - The Liquidator and the Registry are directed to send the copy of this order within 7 days from the date of pronouncement to the RoC with which the Corporate Debtor is registered. Application disposed off.

Summary

Issues Involved:
1. Liquidator's application under Section 54 of the Insolvency and Bankruptcy Code, 2016 for liquidation process.
2. Prayers made by the Liquidator in the Miscellaneous Application.
3. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the I&B Code, 2016.
4. Claims received during the CIR Process.
5. Ceasing of business by the Corporate Debtor and lack of cooperation from Directors/Promoters.
6. Dispute regarding expenses incurred during the CIR Process.
7. Order for liquidation of the Corporate Debtor and appointment of Liquidator.
8. Claims received from EPFO and Income Tax Department.
9. Preparation of reports by the Liquidator based on limited information.
10. Liquidation costs and remuneration to the Liquidator.
11. Lack of financial records and assets for valuation.
12. Legal proceedings during Liquidation Proceedings.
13. Dissolution of the Corporate Debtor and relief to the Liquidator.
14. Directions for payment of Liquidation costs to the Liquidator.

Analysis:

1. The Liquidator filed an application under Section 54 of the Insolvency and Bankruptcy Code, 2016, seeking liquidation of the Corporate Debtor. The application also invoked Regulation 14 and Section 35 read with Regulation 45 of IBBI (Liquidation Process) Regulations, 2016.

2. The Liquidator's prayers included taking record of reports, ordering payment of liquidation costs, dissolution of the company, and any other appropriate orders deemed fit by the Bench.

3. The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor under Section 7 of the I&B Code, 2016, with the appointment of the Liquidator as the Interim Resolution Professional (IRP).

4. During the CIR Process, various financial creditors submitted claims, detailing the amounts owed by the Corporate Debtor, with the Committee of Creditors (CoC) being constituted to oversee the resolution process.

5. The Corporate Debtor had ceased business operations since 2011, and lack of cooperation from Directors and Promoters hindered the formulation of a suitable Resolution Plan.

6. Disputes arose regarding the allocation of expenses incurred during the CIR Process, leading to appeals and directions for payment by the CoC members.

7. Subsequently, the Corporate Debtor was ordered for liquidation, and the Liquidator was appointed to oversee the process.

8. Claims were received from the Employees Provident Fund Organisation (EPFO) and the Income Tax Department, stating outstanding amounts due from the Corporate Debtor.

9. The Liquidator faced challenges due to limited availability of statutory documents and information, leading to the preparation of reports based on the information accessible.

10. Liquidation costs, including the Liquidator's remuneration, were detailed, with directions sought for payment by stakeholders due to the lack of available assets.

11. The absence of financial records and discoverable assets posed challenges in conducting valuations during the liquidation process.

12. Legal proceedings and claims by secured creditors were highlighted, along with the inability to investigate certain matters due to the lack of records.

13. The judgment ordered the dissolution of the Corporate Debtor and relieved the Liquidator from further responsibilities.

14. Directions were provided for the payment of liquidation costs to the Liquidator by the stakeholders in proportion to their lending ratio, effectively concluding the application.