2020 (3) TMI 87 - Tri - Insolvency and Bankruptcy

Aauction sale of the Corporate Debtor - directions to the Liquidator of the Corporate Debtor to hold an open auction afresh allowing them to participate in - Regulation 32(c) of Insolvency and Bankruptcy Board of India (Liquidation Process, Regulation) 2016 - HELD THAT - It was made clear to the applicants that upon sale of the Corporate Debtor to them, it is for the Liquidator to disburse the sale proceeds as per water fall mechanism provided under Section 53 of the Insolvency and Bankruptcy Code, 2016. The Successful Bidder cannot suggest anything as to how such distribution to be done. We also directed the applicant to improve and enhance the payment schedule so as to enable the Liquidator to accept the bid. Accordingly, they filed the revised offer by affidavit dated 23.09.2019. We have gone through the entire record and proceeding of this case. Earlier Successful Bidder, M/S Maithan Alloys Limited has withdrawn offer, hence there was no purchaser of the Corporate Debtor. At that point of time, the applicants gave i proved offer to purchase the Corporate Debtor for sum of ₹ 70 Cr res. We hold that this offer of enhanced bid amount is in tune with the object of the Insolvency and Bankruptcy Code, 2016 i.e. maximization of the assets of the Corporate Debtor. Hence, we direct the Liquidator to accept the bid of the applicants. Application disposed off.

Summary

Issues:
Challenge to auction sale of Corporate Debtor; Participation in auction process; Withdrawal of successful bidder's offer; Consideration of enhanced bid amount; Payment schedule and conditions; Disbursement of sale proceeds; Compliance with Insolvency and Bankruptcy Code.

Analysis:
1. Challenge to Auction Sale: The application filed sought setting aside the auction sale of the Corporate Debtor and further directions for an open auction to allow participation.

2. Participation in Auction Process: The applicants challenged the auction sale on grounds of not being permitted to participate, despite being willing to offer a higher amount than the successful bidder.

3. Withdrawal of Successful Bidder's Offer: The successful bidder decided to withdraw the offer to purchase the Corporate Debtor, prompting the applicants to present a counter offer of ?70 Crores, exceeding the initial bid amount.

4. Consideration of Enhanced Bid Amount: The Tribunal directed the Liquidator to accept the enhanced bid of ?70 Crores by the applicants, emphasizing maximization of the Corporate Debtor's assets in line with the Insolvency and Bankruptcy Code.

5. Payment Schedule and Conditions: The applicants were directed to adhere to a detailed payment schedule, including immediate payment of 15% upon acceptance of the offer and subsequent installments within specified timeframes.

6. Disbursement of Sale Proceeds: The Liquidator was instructed to disburse the sale proceeds according to the waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code, highlighting the Liquidator's role in the distribution process.

7. Compliance with Insolvency and Bankruptcy Code: The Tribunal stressed the importance of complying with the Code, ensuring that the sale process and payment schedule align with the objectives of maximizing the Corporate Debtor's assets.

This comprehensive analysis of the judgment addresses the key issues involved in the challenge to the auction sale of the Corporate Debtor, the subsequent participation in the auction process, the withdrawal of the successful bidder's offer, the consideration of an enhanced bid amount, the payment schedule and conditions set forth, the disbursement of sale proceeds, and the overarching compliance with the provisions of the Insolvency and Bankruptcy Code.