2020 (6) TMI 229 - Tri - Insolvency and Bankruptcy

Initiation of CIRP or liquidation of company - Corporate Debtor failed to make repayment of its dues - existence of dispute or not - HELD THAT - The current assets of the Company is only whereas it current liabilities are approximately INR 49.98 and there is no possibility to revive the Company as the Company sold its plant and machinery long time back and closed down its operations for more than 5 years back. Moreover, the Corporate Applicant owes the liability to its holding Company which supplies all the raw materials to the Corporate Debtor and the Holding Company was also not interested to revive the Company. Therefore, there is hardly any possibility of any Resolution plan likely to be received during first stage of CIRP, if initiated, and thus it would be just and proper to put the Corporate Applicant Debtor under the liquidation process, in order to liquidate the Company, rather than to put it in CIRP in the first instance. M/s. GNB Technologies India Private Limited, Petitioner/Corporate Applicant to be liquidated in the manner as laid down in Chapter III (Liquidation Process) of Part II of the Code - Post the case on 6-12-2019 for report of the Liquidator.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) or Liquidation by a Corporate Debtor under the Insolvency and Bankruptcy Code (IBC).

Analysis:
The case involved a petition filed by a Corporate Debtor seeking to initiate CIRP or Liquidation under the IBC due to insolvency. The Corporate Debtor, a manufacturing company, faced financial difficulties leading to closure of operations and outstanding debts, primarily to operational creditors. The petition highlighted the Company's history, financial position, creditor claims, and the decision to initiate insolvency proceedings. The holding company of the Corporate Debtor also supported the initiation of CIRP. The petition requested the appointment of an Interim Resolution Professional (IRP) to manage the insolvency process.

The court considered the financial reports of the Company, which indicated accumulated losses, negative net worth, and inability to continue as a going concern. The Company's inability to pay its debts, eroded net worth, and lack of operational plans further supported the need for insolvency proceedings. The holding company issued a demand notice for outstanding payments, prompting the Corporate Debtor to respond by initiating insolvency proceedings. The court noted the limited assets of the Company, the significant debt owed, and the absence of a viable resolution plan during the CIRP stage.

After reviewing the pleadings and provisions of the IBC, the court admitted the petition and ordered the liquidation of the Corporate Debtor. The court appointed a Liquidator, subject to agreed terms and conditions, to oversee the liquidation process as per the Code's provisions. The Liquidator was directed to issue a public announcement, inform the Registrar of Companies, and adhere to IBBI regulations for an expeditious liquidation process. The case was scheduled for a follow-up report by the Liquidator.

In conclusion, the judgment addressed the insolvency issues faced by the Corporate Debtor, the decision to proceed with liquidation, and the appointment of a Liquidator to manage the liquidation process in accordance with the IBC and IBBI regulations.