2021 (7) TMI 560 - Tri - Insolvency and Bankruptcy

Seeking Liquidation of Corporate Debtor - seeking appointment of liquidator - Section 33 and 34 of the Insolvency Bankruptcy Code - HELD THAT - It is pertinent to refer Section 33(1)(a) of the IBC, which mandates that where the Adjudicating Authority before the expiry of maximum period permitted for completion of the corporate insolvency resolution process under Section 12 or the fast track corporate insolvency resolution process under Section 56, as the case may be, does not receive a resolution plan under sub-section (6) of Section 30, it shall pass an order requiring the Corporate Debtor to be liquidated in the manner as laid down in the manner. The Tribunal observes that upon failure of the resolution process and no approved resolution plan and further on completion of statutory CIRP process, there is no alternative left but to order in conformity with the decision of the CoC liquidation has to follow under Section 33 of the Code. Adherence of the statutory requirement has to be done as the language of the Code is clear that the adjudicating authority must give effect to it whatever may be consequences - even CoC in its 8th meeting on 04.11.2020 has with 100 % majority has passed the resolution to liquidate the Corporate Debtor as no resolution plan was received for revival of the company and further RP has complied with the provisions laid down under Insolvency and Bankruptcy Code. Thus, by exercising the power under Section 33(1), this Adjudicating Authority hereby directs that the Corporate Debtor i.e. V.A.M. Resorts and Hotels Pvt. Ltd. shall go into Liquidation and the moratorium declared for the Corporate Debtor under Liquidation shall cease to have effect from pronouncement of this Order - the Resolution Professional Mr. Ashish Singh is appointed to act as liquidator. Application allowed.

Summary

Issues:
Liquidation of Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code.

Analysis:
The judgment involves an application filed under Section 33(1)(a) read with 33(2) of the Insolvency and Bankruptcy Code seeking the liquidation of the Corporate Debtor Company. The Adjudicating Authority had initiated the Corporate Insolvency Resolution Process (CIRP) based on a petition by a Financial Creditor and appointed an Interim Resolution Professional (IRP) who was subsequently confirmed as the Resolution Professional (RP) in a CoC meeting. The RP faced non-cooperation from the respondents regarding providing information about the Corporate Debtor's properties, leading to the filing of an application under Section 19(2) of the IBC, which was allowed by the Adjudicating Authority.

In subsequent CoC meetings, valuers were appointed for different assets, and efforts were made to invite Expression of Interest (EOI) from prospective resolution applicants. Despite extensions granted, no EOI was received. The CoC discussed settlement requests from suspended directors, which ultimately failed. A forensic audit was conducted, and two EOIs were received but no resolution plans were submitted by the applicants.

After multiple extensions and failed attempts at resolution, the CoC unanimously resolved to liquidate the Corporate Debtor as no resolution plan was received for revival. The Adjudicating Authority, in accordance with Section 33 of the IBC, ordered the liquidation of the Corporate Debtor, appointing the RP as the Liquidator. The Liquidator was directed to follow the provisions of the IBC, send intimation to the Registrar of Companies, and publish a public announcement about the liquidation. Progress reports were to be filed every three months.

The Tribunal emphasized the statutory requirement for liquidation upon the failure of the resolution process, as mandated by the IBC. The decision to liquidate was supported by the CoC's unanimous resolution and the RP's compliance with the Code's provisions. The Adjudicating Authority's order directed the commencement of liquidation, ending the moratorium for the Corporate Debtor, and appointed the RP as the Liquidator, ensuring compliance with the IBC's procedures and reporting requirements.