2021 (4) TMI 1179 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - seeking direction to the petitioner or COC member to release an amount of ₹ 14,92,122/- to the applicant, the other professional and agencies as per the CIRP sheet - HELD THAT - During the 3rd meeting of the CoC which was held on 19.09.2019, the CoC decided to liquidate the company as the unit is not in operation since long and there are no workers and employees. No Expression of Interest received from prospective resolution applicant, the Committee of Creditors approved the initiation of liquidation of the corporate debtor by passing the resolution and directed the Resolution Professional to file miscellaneous application and seek the further direction and order under section 33(1)(a) and 34(1) of the code from this Tribunal by passing the resolution with voting share of 100% of physically present. It is observed from the minutes of the 3rd CoC meeting that the CoC has, with 100% majority, decided to liquidate the Corporate Debtor and relying on the settled principle of law regarding the Commercial Wisdom of the CoC - the application is allowed.

Issues:
Liquidation of Corporate Debtor under Sections 33(1)(a) and 34(1) of the Insolvency and Bankruptcy Code, 2016.

Issue 1: Liquidation Application and Relief sought
The Resolution Professional filed an application seeking liquidation of the Corporate Debtor under Sections 33(1)(a) and 34(1) of the Insolvency and Bankruptcy Code, 2016. The application requested various reliefs, including an order for liquidation, direction to release a specific amount to the applicant, and any other suitable directions. The Resolution Professional highlighted the history of the case, starting from the admission of the petition under Sections 8 & 9 of the Code, the formation of the Committee of Creditors (CoC), and the decision to liquidate the company due to its inactivity and lack of interest from prospective resolution applicants. The Resolution Professional expressed inability to act as the Liquidator for the Corporate Debtor.

Issue 2: Decision on Liquidation
During the 3rd meeting of the CoC, it was unanimously resolved to liquidate the Corporate Debtor. The CoC's decision was based on the absence of operations and employees, coupled with the lack of interest from potential resolution applicants. The Resolution Professional was directed to file a miscellaneous application seeking further directions and orders under Sections 33(1)(a) and 34(1) of the Code. The CoC's decision to liquidate the Corporate Debtor was supported by all members with a 100% majority vote. Consequently, the Tribunal acknowledged the CoC's commercial wisdom in deciding to liquidate the Corporate Debtor and allowed the Interlocutory Application.

Issue 3: Tribunal's Directions on Liquidation
After considering the application and relevant documents, the Tribunal made several key observations and directions. It appointed a specific Liquidator as provided under Section 34(1) of the Code. The Liquidator was authorized to conduct the liquidation proceedings and entitled to fees as per the regulations. The Tribunal instructed the Liquidator to follow the liquidation process regulations and exercise all powers of the board of directors, key managerial personnel, and partners of the Corporate Debtor. Additionally, the Tribunal directed the issuance of a public notice for the Corporate Debtor's liquidation and emphasized cooperation from the Corporate Debtor's personnel. Legal proceedings against the Corporate Debtor were restricted, except with the Liquidator's approval. The order of liquidation served as a discharge notice to the Corporate Debtor's officers, employees, and workmen, except for ongoing business operations managed by the Liquidator.

In conclusion, the Tribunal allowed and disposed of the application for liquidation, appointing a Liquidator and providing detailed directions for the liquidation process in accordance with the Insolvency and Bankruptcy Code, 2016.

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