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2020 (12) TMI 492 - Tri - Insolvency and BankruptcyLiquidation of the corporate debtor - Section 33 (1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Applicant sought exclusion of approximately 424 days from the CIRP as the said days were lost in the legal proceedings - the Adjudicating Authority vide its order dated 15.01.2020 did not consider exclusion but granted extension of 90 days to complete the CIRP and find a successful Resolution Applicant. However in the 5thCoC meeting held on 29.01.2020 it was resolved that in the light of present situation of the Corporate Debtor where there is no registered office, no operations going on in the Company/factory premise of the Corporate Debtor, no employees, workers, Directors working, the Corporate Debtor is completely shut down and it would be feasible and viable to liquidate the Corporate Debtor under Section 33(2) of the IBC, 2016 in the interest of various stakeholders of the Corporate Debtor. The Resolution Professional represents that valuation report as required to be obtained under the provisions of IBC, 2016 in relation to the fair value of the assets of the corporate debtor as well as its liquidation value has been duly done by 2 registered valuers and 2 reports dated 22.10.2019 and 15.11.2019 have been submitted before the Adjudicating Authority. The average of the fair value of assets and liquidation value as per the reportsis ₹ 1,65,00,000/- and ₹ 1,15,50,000/- respectively. This Tribunal in the circumstances taking into consideration the provisions of law as well as on facts is constrained to order for liquidation of the corporate debtor and in the circumstances the corporate debtor stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of IBC, 2016 and more particularly as given in Chapter III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 - Application allowed.
Issues involved:
1. Application under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 for liquidation of Sungil India Private Limited. 2. Determination of financial creditor status of CoC members. 3. Exclusion of days lost in legal proceedings from the CIRP timeline. 4. Decision on liquidation of the corporate debtor based on valuation reports. Detailed Analysis: 1. The Resolution Professional filed an application for liquidation of Sungil India Private Limited under Section 33(1) of the Insolvency and Bankruptcy Code, 2016. The process began with the appointment of an Interim Resolution Professional and subsequent CoC meetings to appoint a Resolution Professional. The Adjudicating Authority considered the background of the case, including challenges to the financial creditor status of certain CoC members, leading to the decision to declare them as unsecured creditors rather than financial creditors eligible for the CIRP process. 2. The Adjudicating Authority's analysis focused on whether the advances made by certain CoC members constituted financial debt or unsecured loans. It was observed that the absence of formal loan agreements did not preclude the advances from being categorized as loans, especially considering the interest payments made by the Corporate Debtor. The Authority also highlighted the exorbitant interest rates charged by these members, leading to a determination of extortionate credit transactions, thereby impacting their financial creditor status. 3. Regarding the exclusion of days lost in legal proceedings from the CIRP timeline, the Resolution Professional sought an extension due to legal delays. While the Adjudicating Authority did not grant exclusion, it provided a 90-day extension to complete the CIRP. However, given the non-operational status of the Corporate Debtor and the absence of viable resolution options, the decision was made to proceed with liquidation under Section 33(2) of the IBC in the stakeholders' interest. 4. Valuation reports determining the fair value and liquidation value of the Corporate Debtor were submitted to the Adjudicating Authority. The average values were assessed, leading to the Tribunal's decision to order the liquidation of the corporate debtor. The Liquidator was appointed, and various directions were issued regarding public announcements, communication with regulatory authorities, cessation of moratorium, discharge of employees, and the initiation of the liquidation process in compliance with relevant regulations. In conclusion, the Tribunal's detailed judgment addressed the issues of financial creditor status, legal proceedings' impact on CIRP timelines, and the decision to liquidate Sungil India Private Limited based on valuation reports and regulatory compliance.
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