2021 (5) TMI 641 - Tri - Insolvency and Bankruptcy

Liquidation of the Corporate Debtor - resolution plan submitted by the sole resolution applicant Select Products Private Limited was not approved through a vote exceeding 66% - Section 33 of the Insolvency Bankruptcy Code, 2016 - 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 percent of the voting share, to liquidate the Corporate Debtor. In the present case, the CoC has resolved by 99.99% voting share to liquidate the Corporate Debtor. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with Sub-section (1) thereof - Application allowed.

Summary

Issues:
1. Application for liquidation under Section 33 of the Insolvency & Bankruptcy Code, 2016.
2. Approval of resolution plan by Committee of Creditors.
3. Appointment of Resolution Professional and subsequent liquidation process.
4. Compliance with statutory requirements and regulations during the insolvency process.

Analysis:
1. The application under Section 33 of the Insolvency & Bankruptcy Code, 2016 sought liquidation of the Corporate Debtor due to the non-approval of the resolution plan by the Committee of Creditors (CoC) with a 99.99% vote share. The Adjudicating Authority had earlier directed initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on a petition filed by an operational creditor.

2. The Resolution Professional was appointed after due process, and subsequent meetings of the CoC were held to discuss the resolution plan and related matters. The impact of the Covid-19 pandemic on the insolvency proceedings was noted, leading to adjustments in the approach towards resolution and liquidation.

3. The Resolution Professional's efforts to solicit resolution plans were hindered by market perceptions and delays in plan submission by the Corporate Debtor. The CoC eventually decided to opt for liquidation, leading to the appointment of the Resolution Professional as the Liquidator to oversee the liquidation process in accordance with the Code and relevant regulations.

4. The detailed order by the Adjudicating Authority outlined the steps to be taken for the liquidation process, including public notices, transfer of powers to the Liquidator, cessation of existing corporate powers, and compliance with statutory reporting requirements. The order also emphasized the discharge of officers, employees, and workmen of the Corporate Debtor, except for those involved in continuing the business during liquidation.

This comprehensive analysis reflects the procedural aspects, decision-making by the CoC, the role of the Resolution Professional, and the eventual liquidation order issued by the Tribunal, ensuring compliance with the Insolvency & Bankruptcy Code and related regulations.