2021 (1) TMI 145 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - extension of CIRP period beyond the 330 days period was declined - Section 33(1) of IBC, 2016 - HELD THAT - Section 33(1) of IBC, 2016 contemplates that this Tribunal can pass an order of Liquidation of the Corporate Debtor if the maximum period permitted for the completion of the CIRP is over - Admittedly, in the present case, the extension of CIRP period beyond the 330 days period was declined and not granted by this Tribunal and as such by operation of Section 33(1)(a) of IBC, 2016, the Corporate Debtor is necessarily required to be ordered for liquidation as stipulated under 33(1)(b)(i) of IBC, 2016. During the course of submissions, it was brought to the knowledge of this Tribunal that the promoters have submitted a Resolution plan and till such time the Resolution plan is considered this Tribunal should abstain from passing an order of Liquidation - However in the present case, it is to be noted that the 330 days period of CIRP has already expired and the CoC in its 6th meeting held on 27.02.2020 has unanimously resolved to liquidate the Corporate Debtor. Further, even during the Liquidation process, subject to Section 29A of the IBC, 2016 and as per Regulation 2B of the IBBI (Liquidation Process) Regulations, 2016, a 90 day time period is provided to submit a Scheme as contemplated under Section 230 of the Companies Act, 2013, and if the Promoter / Director of the Corporate Debtor is otherwise found eligible can very well submit a Scheme for the revival of the Corporate Debtor. The Liquidation of Corporate Debtor is ordered - Liquidator shall strictly act in accordance with the provisions of IBC, 2016 and the attendant Rules and regulations including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 as amended upto date enjoined upon him - application disposed off.

Summary

Issues: Liquidation of Corporate Debtor

1. Corporate Insolvency Resolution Process (CIRP) Initiation:
The application was filed under Section 33(1) and 34(1) of the Insolvency and Bankruptcy Code 2016 seeking liquidation of the Corporate Debtor. The Tribunal had earlier initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor and appointed the Applicant as the Interim Resolution Professional (IRP).

2. Lack of Cooperation and Information:
The Applicant faced challenges as the erstwhile promoters/directors and key officers of the Corporate Debtor refused to cooperate, hindering the gathering of necessary information for the resolution process. Despite efforts and court orders, the required financial details and cooperation were not forthcoming, leading to difficulties in valuations and preparation of accounts.

3. Extension of CIRP Period and Liquidation Decision:
After multiple CoC meetings and unsuccessful attempts to gather information, the CIRP period expired, and an application for extension was dismissed by the Tribunal. Consequently, the CoC unanimously resolved to liquidate the Corporate Debtor. The Tribunal, in accordance with Section 33(1) of the IBC, 2016, ordered the liquidation of the Corporate Debtor.

4. Appointment of Liquidator and Process:
The Tribunal appointed a Liquidator to carry out the liquidation process, subject to specific terms and directions. The Liquidator was instructed to adhere strictly to the provisions of the IBC, 2016 and related regulations, investigate financial affairs, communicate with relevant authorities, and proceed with the liquidation process as per the Code. Additionally, the Liquidator was mandated to submit reports within specified timelines and inform stakeholders about the liquidation process.

5. Disposal of Application and Closure:
The Tribunal disposed of the application with the outlined terms and directed the Liquidator to engage with financial creditors, the Corporate Debtor, and other stakeholders to facilitate the liquidation process effectively. All connected applications were closed as part of the judgment.