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2019 (10) TMI 418 - AT - Insolvency and BankruptcyLiquidation Order - exclusion of certain period to enable the Committee of Creditors to accept the Resolution Plan - HELD THAT - Taking into consideration the fact, that Information Memorandum was published and in the absence of any viable or feasible Resolution Plan order of Liquidation was passed. We are not inclined to interfere with the order dated 10th December, 2018.' During the period of liquidation, the Liquidator is to ensure that the Corporate Debtor continues as a going concern and Liquidator is required to act in terms of decision of this Appellate Tribunal in Y. SHIVRAM PRASAD AND ASSET RECONSTRUCTION COMPANY (INDIA) LTD. VERSUS S. DHANAPAL ORS. AND SERVALAKSHMI PAPER LTD. ORS 2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI where it was held that It is clear that during the liquidation process, step required to be taken for its revival and continuance of the Corporate Debtor by protecting the Corporate Debtor from its management and from a death by liquidation. The Appellant being the Promoter may move before the Liquidator, if he intends to file scheme in terms of section 230 of the Companies Act, 2013. Appeal disposed off.
Issues Involved:
1. Exclusion of time period for the Committee of Creditors to accept the Resolution Plan. 2. Preparation and publication of the Information Memorandum. 3. Submission and rejection of the Resolution Plan. 4. Liquidation process and the role of the Liquidator. 5. Revival of the Corporate Debtor during liquidation under Section 230 of the Companies Act, 2013. Issue-wise Detailed Analysis: 1. Exclusion of Time Period for the Committee of Creditors to Accept the Resolution Plan: The Appellant, the promoter of 'M/s. Oceanic Edibles International Limited', filed an application under Section 60(5) before the Adjudicating Authority (National Company Law Tribunal, Single Bench, Chennai) for the exclusion of a certain period to enable the Committee of Creditors to accept the Resolution Plan. The Adjudicating Authority rejected the prayer due to the absence of merit and ordered liquidation on 10th December 2018. The Appellant preferred two separate appeals challenging the rejection of the exclusion of time and the order passed under Section 33(1)(a). 2. Preparation and Publication of the Information Memorandum: The Appellant's counsel argued that no Information Memorandum was prepared, which hindered the submission of a proper Resolution Plan. However, the Resolution Professional and the Committee of Creditors' counsel countered this by stating that the Information Memorandum was prepared and published on 30th July 2018, and despite its circulation, no viable Resolution Plan was submitted. 3. Submission and Rejection of the Resolution Plan: The Resolution Professional submitted that one Resolution Plan was submitted by 'M/s. B.R. Traders', which was rejected. The appeal preferred by 'M/s. B.R. Traders' was also rejected by the Appellate Tribunal. The Tribunal, after hearing the parties and considering the facts, noted that the Information Memorandum was published, and in the absence of any viable or feasible Resolution Plan, the order of liquidation was passed. The Tribunal decided not to interfere with the order dated 10th December 2018. 4. Liquidation Process and the Role of the Liquidator: The Tribunal emphasized that during the liquidation period, the Liquidator must ensure that the Corporate Debtor continues as a going concern. The Liquidator is required to act in accordance with the decision of the Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 224 of 2018 in Y. Shivram Prasad Vs. S. Dhanapal & Ors. This includes verifying claims of all creditors, taking custody and control of all assets, carrying on the business for beneficial liquidation, and taking steps under Section 230 of the Companies Act, 2013. 5. Revival of the Corporate Debtor During Liquidation Under Section 230 of the Companies Act, 2013: The Tribunal referred to the Supreme Court's observations in 'Swiss Ribbons Pvt. Ltd. & Anr. v. Union of India & Ors.' and 'Meghal Homes Pvt. Ltd. vs. Shree Niwas Girni K.K. Samiti & Ors.' to highlight that liquidation should be the last resort. The primary focus of the legislation is to ensure the revival and continuation of the Corporate Debtor. The Liquidator must take steps for revival through compromise or arrangement with creditors or members under Section 230. If such efforts fail, the Liquidator should attempt to sell the business as a going concern. The Tribunal also noted that the Adjudicating Authority could extend the period for the liquidation process under Section 230 if there is a chance of approval of the arrangement or scheme. In conclusion, the Tribunal disposed of both appeals with the observation that the Appellant, being the Promoter, may move before the Liquidator to file a scheme in terms of Section 230 of the Companies Act, 2013. The Tribunal directed the Liquidator to act in accordance with the law and the directions provided to ensure the revival of the Corporate Debtor, if possible, before proceeding with the sale of assets. No costs were imposed.
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