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2021 (1) TMI 510 - Tri - Insolvency and BankruptcyLiquidation of the corporate debtor - liquidation sought on the ground that there is no possibility for resolution of the corporate debtor - HELD THAT - Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the corporate debtor where the resolution professional at any time during the CIRP but before confirmation of the resolution plan intimates the Adjudicating authority of the decision of the CoC approved by not less than sixty-six per cent. of the voting share to liquidate the corporate debtor. In the present case the CoC has resolved by 100 per cent. voting share to liquidate the corporate debtor. Application is allowed and the corporate debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof.
Issues Involved:
Liquidation of corporate debtor Nippon Alloy Ltd. due to inability to resolve the debtor's financial situation. Detailed Analysis: 1. Background and Initiation of CIRP: The application filed by the resolution professional on behalf of the committee of creditors (CoC) sought liquidation of the corporate debtor, Nippon Alloy Ltd., due to the impossibility of resolving its financial situation. The Adjudicating Authority had earlier directed the initiation of the corporate insolvency resolution process (CIRP) against the corporate debtor based on a petition filed by an operational creditor under section 9 of the Insolvency and Bankruptcy Code, 2016. The CoC was duly constituted, and the resolution professional was appointed to manage the affairs of the corporate debtor during the CIRP. 2. CoC Meetings and Decision-Making Process: Various meetings of the CoC were held to discuss the resolution or liquidation of the corporate debtor. Despite deferring the decision on inviting expressions of interest (EoI) initially, the CoC eventually decided to proceed with the liquidation due to the corporate debtor's prolonged inactivity, lack of major assets, and the adverse impact of the COVID-19 pandemic on the steel industry. The decision to liquidate the corporate debtor was approved unanimously by the CoC in a meeting held on September 23, 2020. 3. Appointment of Liquidator and Legal Procedures: The resolution professional, Mr. Subodh Kumar Agrawal, agreed to act as the liquidator and provided his consent to carry out the liquidation process in accordance with the provisions of the Insolvency and Bankruptcy Code. The Adjudicating Authority, following the CoC's decision, ordered the liquidation of the corporate debtor under section 33(2) of the Code. Mr. Subodh Kumar Agrawal was appointed as the liquidator subject to meeting the necessary regulatory requirements. 4. Liquidation Process and Legal Obligations: The liquidator was directed to initiate the liquidation process as per the provisions outlined in Chapter III of the Insolvency and Bankruptcy Code and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Public notices were to be issued to inform stakeholders about the commencement of the liquidation process. The powers of the board of directors and key managerial persons ceased to exist, transferring to the liquidator. The corporate debtor's personnel were instructed to cooperate with the liquidator during the liquidation process. 5. Legal Consequences and Discharge of Obligations: Upon the initiation of the liquidation process, legal proceedings against the corporate debtor were restricted, except with the approval of the Adjudicating Authority. The liquidation order served as a notice of discharge to the officers, employees, and workmen of the corporate debtor, except for ongoing business activities managed by the liquidator. The liquidator was required to file a copy of the liquidation order with the Registrar of Companies to formalize the liquidation process. This comprehensive summary encapsulates the key details and legal implications of the judgment delivered by the National Company Law Tribunal — Kolkata Bench regarding the liquidation of Nippon Alloy Ltd.
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