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2021 (1) TMI 443 - Tri - Insolvency and BankruptcySeeking to order for distribution of the unsold Intangible Assets- Intellectual Property available with the Corporate Debtor - Section 35(1)(n) of Code R/w Regulation 38(1) of IBBI( Liquidation Process) Regulations, 2016 - HELD THAT - The assets of the Corporate Debtor have been completely liquidated and only intellectual Property in question, on which TDB has charge, remains with Corporate Debtor. The Applicant has also explored the possibility of selling it but in vain. And the amount realised out of liquidation of assets was only ₹ 2,26,000/- which was utilised for CIRP costs, and no further funds will be available even for CIRP costs, if it is further permitted to continue. Therefore, instead of permitting the Applicant to file another Application U/s 54 of the Code, and the extant Regulations of IBBI (Liquidation Process) Regulations, 2016, to seek dissolution of the Company, it would be just and proper for the Adjudicating Authority to exercise its discretionary powers to dissolve the Company, in the interest of justice. The Applicant is permitted to assign absolute rights over Unsold Intangible Assets- Intellectual Property available with the Corporate Debtor, Virtual Logic Systems Private Limited, to Technology Development Board, Secured Financial Creditor, towards their liability, immediately after receipt of a copy of this order and complete the remaining liquidation process - Subject to above distribution to TDB, the Corporate Debtor, namely M/s. Virtual Logic Systems Private Limited is hereby dissolved with immediate effect - petition disposed off.
Issues involved:
Liquidation and distribution of unsold Intangible Assets- Intellectual Property of a Corporate Debtor, Technology Development Board's claim over the Intellectual Property, Application for dissolution of the Corporate Debtor due to insufficient funds. Analysis: The judgment pertains to an Application filed by the Liquidator of a Corporate Debtor seeking to distribute the unsold Intangible Assets- Intellectual Property to a Secured Financial Creditor, the Technology Development Board (TDB), towards their liabilities. The Liquidator had explored various avenues to sell the Intellectual Property but faced challenges due to the technical nature of the products and lack of interest from prospective buyers. TDB, being a Secured Financial Creditor with a significant claim, had initially relinquished its security interest in the Intellectual Property to be part of the liquidation estate. However, TDB later withdrew the relinquishment to enable the dissolution of the Corporate Debtor. The judgment highlighted the provisions under Regulation 14 of the IBBI (Liquidation Process) Regulations, 2016, allowing the Liquidator to apply for early dissolution of the Corporate Debtor if the realizable properties are insufficient to cover liquidation costs and no further investigation is required. The Liquidator demonstrated that all assets of the Corporate Debtor had been liquidated except for the Intellectual Property, which remained unsold despite efforts to sell it. The funds realized from the liquidation were minimal, and continuing the process would not yield further funds. The Adjudicating Authority, considering the circumstances, exercised its discretionary powers under Section 54(2) of the Insolvency and Bankruptcy Code, 2016, along with Regulation 14 of the IBBI (Liquidation Process) Regulations, 2016, to dispose of the Application and the Corporate Insolvency Resolution Process. The judgment directed the distribution of the unsold Intellectual Property to TDB, the dissolution of the Corporate Debtor, and the necessary notifications to relevant authorities. Importantly, the judgment clarified that the dissolution of the Corporate Debtor would not absolve the Directors of any personal legal liability they might have. In conclusion, the judgment addressed the complex issues surrounding the liquidation and distribution of Intangible Assets, the involvement of a Secured Financial Creditor, and the application for dissolution due to financial constraints. It provided a comprehensive analysis of the legal framework and the specific circumstances of the case to arrive at a just and proper decision in the interest of justice.
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