2020 (1) TMI 469 - Tri - Insolvency and Bankruptcy

Rejection of Resolution plan - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It was brought to the knowledge of the CoC members that the Resolution Plan was rejected and the 270 days period was going to expire on 22.04.2019. There was no possibility of resolution taking place in Emgee Cables and Communications Limited. Therefore, the CoC unanimously passed a resolution to liquidate the Corporate Debtor. This Tribunal is constrained to order for liquidation of the corporate debtor and in such background the corporate debtor stands liquidated with the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of the Insolvency and Bankruptcy Code, 2016 and more particularly as given in Chapter III of the Insolvency and Bankruptcy Code, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017.

Issues:
Liquidation proceedings under Section 33(2) of the Insolvency and Bankruptcy Code, 2016; Rejection of resolution plan by Committee of Creditors; Application for declaration of transactions as preferential, undervalued, and fraudulent; Condonation of delay in filing claim by Equitas Small Finance Bank Ltd.; Direction to present proposed resolution plan for reconsideration; Addition of Bank of Baroda as a necessary party in the proceedings.

Liquidation Proceedings:
The Tribunal considered an application filed by the Resolution Professional under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 for the initiation of liquidation proceedings against the Corporate Debtor, as approved by the Committee of Creditors. The Resolution Professional had previously invited expressions of interest, which resulted in a resolution plan being received but subsequently rejected by the CoC. The CoC unanimously passed a resolution for liquidation due to the expiration of the resolution period and the inability to reach a resolution. Consequently, the Tribunal ordered the liquidation of the Corporate Debtor and appointed a Liquidator to oversee the process in accordance with the relevant regulations.

Rejection of Resolution Plan:
The resolution plan submitted by a consortium was rejected by the CoC after multiple revisions. Reasons for rejection included concerns about the reliability of the sources of funds and discrepancies in the valuation of assets. The rejection led to the decision for liquidation as the CoC deemed it unfeasible to continue the resolution process. The Tribunal upheld the decision for liquidation based on the provisions of the Insolvency and Bankruptcy Code, 2016, and directed the Liquidator to proceed with the liquidation process as per the regulations.

Application for Declaration of Transactions:
The RP had filed an application against certain individuals for declaring transactions as preferential, undervalued, and fraudulent. This application sought recovery of amounts and directions under Section 67 of the Insolvency and Bankruptcy Code, 2016. The details of this application were presented as part of the overall proceedings related to the Corporate Debtor.

Condonation of Delay and Other Applications:
Various other applications were filed during the proceedings, including a request for condonation of delay in filing a claim by Equitas Small Finance Bank Ltd., a plea to present the proposed resolution plan for reconsideration, and a petition to add Bank of Baroda as a necessary party. These applications were directed to be listed alongside the main liquidation proceedings for further consideration by the Tribunal.

In conclusion, the Tribunal's judgment ordered the liquidation of the Corporate Debtor based on the rejection of the resolution plan by the CoC and in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016. The detailed directions provided by the Tribunal outlined the process and responsibilities of the appointed Liquidator, along with the necessary communications to regulatory authorities and stakeholders.

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