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2020 (10) TMI 1036 - Tri - Insolvency and BankruptcyLliquidation of the corporate debtor - applicant appraised the COC, that since the COC had not approved extension of CIRP time, therefore no fresh invitation for EOI or extension can be given to Prospective Resolution Applicants. Further appraised that the CIRP period is ending on 23.06.25020, therefore the applicant is left with no option but to file application for liquidation of Corporate Debtor in terms of Section 33(1)(a) of IBC, 2016. HELD THAT - Since the COC in its commercial wisdom has decided not to seek extension of CIRP period but to take the corporate debtor in liquidation and explore the possibility of it being sold as going concern, we are of opinion that the decision of COC should not be interfered. The present application seeking liquidation of the corporate debtor, UTM Engineering Private Limited, in the manner laid down in the Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 is allowed. Application admitted.
Issues:
1. Application for liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016. 2. Constitution of Committee of Creditors (COC) and reconstitution with new financial creditors. 3. Invitation for Expression of Interest (EOI) and submission by prospective resolution applicants. 4. Valuation process hindered by lack of information from the board of directors. 5. Proposal for replacement of Resolution Professional (RP) and pending application. 6. Admission of missing documents and claims from financial creditors. 7. Decision on extension of Corporate Insolvency Resolution Process (CIRP) period. 8. Approval for sale of the corporate debtor as a going concern. 9. Application for liquidation due to non-approval of CIRP extension. 10. Appointment of Liquidator and directions for liquidation process. Analysis: 1. The application filed by the Resolution Professional (RP) sought an order for the liquidation of the corporate debtor under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016. The Tribunal allowed the application, noting the decision of the Committee of Creditors (COC) not to seek an extension of the Corporate Insolvency Resolution Process (CIRP) period but to proceed with liquidation. 2. The RP constituted a Committee of Creditors (COC) in compliance with Section 18(1)(a) of the Code, comprising the sole financial creditor initially, which was later reconstituted to include a new financial creditor. The COC approved the appointment of the RP and verified and approved the claim of another financial creditor, leading to the reconstitution of the COC. 3. Following the submission of Expression of Interest (EOI) by prospective resolution applicants, it was found that none met the eligibility criteria. Subsequent publications for EOI with extended timelines were made due to non-fulfillment of requirements by the initial applicants. 4. The valuation process was impeded by the lack of information regarding fair value and liquidation value from the suspended board of directors, leading to a pending application under Section 19(2) of the Code. 5. A proposal for the replacement of the RP was made by a financial creditor, which led to a resolution by the COC for the replacement and a pending application before the NCLT, New Delhi Bench. 6. Missing documents were received from a financial creditor, and claims were admitted after verification, prompting the reconstitution of the COC with additional financial creditors. 7. The decision on the extension of the CIRP period was put forth for e-voting, seeking an extension beyond 180 days, which was disapproved by the COC, resulting in the application for liquidation. 8. The COC approved the sale of the corporate debtor as a going concern with a significant voting share, emphasizing the importance of exploring the possibility of selling the entity in the best interest of stakeholders. 9. Due to the non-approval of the CIRP extension, the RP informed the COC of the impending end of the CIRP period, necessitating the filing of an application for liquidation in accordance with Section 33(1)(a) of the IBC, 2016. 10. The Tribunal allowed the application for liquidation, appointing a Liquidator with specific directions for the liquidation process, including issuing a Public Announcement, investigating financial affairs, and submitting a Preliminary Report within the stipulated timeline. The Moratorium under Section 14 ceased to have effect, initiating a fresh Moratorium under Section 33(5) of the IBC.
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