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2021 (5) TMI 613 - Tri - Insolvency and BankruptcyRevaluation of Corporate Debtor - Revaluation sought so that resolution plan can be revised - HELD THAT - It appears from the record that the resolution of the present Corporate Debtor has been in lurch since the beginning. It appears from the record that the 180 days' CIRP period had expired on 02.09.2019, upon application, this Adjudicating Authority vide its order dated 30.08.2019 approved the extension of the CIRP period for further ninety days which expired on 01.12.2019. This Adjudicating Authority extended the said period further by forty five days upon submission on behalf of the RA that they were desirous of substantially increasing their financial offer. It is seen that the CoC had been repeatedly requesting the RA to increase the amount proposed and the RA had increased the said amount by a sum that was not acceptable to the CoC. The CoC had therefore decided to send the CoC in liquidation and an application was filed before this Adjudicating Authority. 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 percent of the voting share, to liquidate the Corporate Debtor. In the present case, the CoC has, by 97.21% votes, resolved to liquidate the Corporate Debtor - we are not inclined towards granting the prayer for revaluation of the Corporate Debtor. Application dismissed.
Issues:
1. Application for revaluation of the Corporate Debtor. 2. Application for liquidation of the Corporate Debtor. Analysis: Issue 1: Application for revaluation of the Corporate Debtor The Resolution Applicant (RA) filed an application for revaluation of the Corporate Debtor, citing the impact of the Covid-19 pandemic on the global market scenario, which significantly affected the valuation of the Corporate Debtor. The RA argued that the valuation done before March 2020 did not reflect the true worth of the Corporate Debtor due to drastic changes in economies, especially in sectors like automobile and construction. The RA requested the Resolution Professional (RP) to conduct revaluation to enable effective implementation of the Resolution Plan without financial strain. However, the RP contended that valuation is primarily for determining fair and liquidation values, not for assessing future income prospects of the RA. The RP emphasized that the RA had no standing to demand revaluation solely to revise its Resolution Plan. The Adjudicating Authority noted the prolonged resolution process, expired CIRP periods, repeated requests to enhance the offer amount by the CoC, and ultimately rejected the application for revaluation, considering the lack of progress and the CoC's decision to liquidate the Corporate Debtor. Issue 2: Application for liquidation of the Corporate Debtor The RP filed an application for liquidation of the Corporate Debtor as no Resolution Plan was approved by the Committee of Creditors (CoC). The CoC, by a significant majority vote, resolved to liquidate the Corporate Debtor due to repeated rejections of Resolution Plans submitted by the RA. Despite extensions granted for plan submissions, the CoC found the offers inadequate and below the liquidation value. The Adjudicating Authority, after considering the objectives of the Insolvency and Bankruptcy Code (IBC) to maximize asset value and ensure timely resolution, ordered the liquidation of the Corporate Debtor as per section 33(2) of the Code. The Authority appointed the RP as the liquidator, directing initiation of the liquidation process in accordance with the relevant regulations. The Authority also issued directions regarding cessation of powers of the Board of Directors, cooperation with the Liquidator, legal proceedings, discharge of officers and employees, and filing of the liquidation order with the Registrar of Companies. In conclusion, the Tribunal dismissed the application for revaluation, allowed the application for liquidation, appointed the RP as the liquidator, and issued comprehensive directions for the liquidation process, emphasizing the time-bound nature of the IBC objectives and the need to maximize asset value during insolvency proceedings.
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