2021 (7) TMI 618 - Tri - Insolvency and Bankruptcy

Seeking approval of sale of Corporate Debtor as a going concern - section 60(5) of the Insolvency Bankruptcy Code, 2016 - HELD THAT - There are no disputes regarding the basic facts of the case such as Advertisement for sale of Intangible Assets viz. Credentials, Arbitration Receivables, Work-in-Progress (Contracts) of the Company under Liquidation as well as the Special Terms Conditions stated in the Tender Documents and the process of e-auction conducted by the Liquidator in which the Impleading Respondents were declared as Successful Auction Purchasers. This Adjudicating Authority while dismissing the prayer of the Successful Bidder regarding adjustment of all the amounts received from the arbitration receivables, work-in-progress from the date of declaration of Respondents as Successful Bidder till date towards the balance bid consideration payable by the respondents, gave a specific direction to the Liquidator to provide Audited Financial Statements of the Company upto 30.09.2020 and also to provide copies of Agreements relating to ongoing projects and details of receivables until 30.09.2020 to the Respondents. It appears that the Successful Bidder, who is the Impleading Respondent herein has already paid 25% of the total bid value of ₹ 12.43 crores but has not made further payments to the Liquidator so as to complete the sale - both sides directed to take necessary steps for completion of the sale in terms of the Insolvency Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the terms of sale as advertised by the Liquidator in respect of the intangible assets of the company under liquidation. Application disposed off.

Summary

Issues Involved:
1. Approval of the sale of the Corporate Debtor as a going concern.
2. Compliance with the terms and conditions of the tender document.
3. Provision of financial statements and project details by the Liquidator.
4. Payment obligations of the successful bidder.
5. Completion of the sale process as per liquidation regulations.

Issue-wise Detailed Analysis:

1. Approval of the Sale of the Corporate Debtor as a Going Concern:
The application was filed by the Liquidator under Section 60(5) of the Insolvency & Bankruptcy Code, 2016, seeking approval for the sale of the Corporate Debtor, VNR Infrastructures Limited (VNRIL), as a going concern. The Tribunal had previously ordered the liquidation of VNRIL due to the absence of a viable resolution plan. The Liquidator explored the possibility of selling the intangible assets, including credentials, arbitration receivables, and work-in-progress contracts.

2. Compliance with the Terms and Conditions of the Tender Document:
The tender documents included specific "Special Terms & Conditions," such as the responsibility for bank guarantees and the right to initiate recovery through arbitration. The successful bidder acknowledged and signed these terms. The Liquidator provided a revised list of bank guarantees and other relevant details to the bidder via email.

3. Provision of Financial Statements and Project Details by the Liquidator:
The Tribunal had directed the Liquidator to provide audited financial statements and details of ongoing projects and receivables until 30-09-2020. The Liquidator sent a letter and an audited balance sheet for the financial year 2015-16 to the successful bidder, clarifying that other financial statements would be arranged in due course. However, the Respondent claimed that the Liquidator had not fully complied with these orders and requested further details.

4. Payment Obligations of the Successful Bidder:
The Respondent won the bid for ?12.43 crores and paid 25% of the total bid value but had not made further payments. The Tribunal noted that the highest bidder is required to provide the balance sale consideration within 15 days of being invited to do so. The Respondent argued that they needed updated information on the arbitration receivables and work-in-progress before completing the payment.

5. Completion of the Sale Process as per Liquidation Regulations:
The Tribunal emphasized the need for both parties to complete the sale process in accordance with the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The Liquidator was directed to execute the Certificate of Sale and deliver the assets upon full payment by the successful bidder.

Conclusion:
The Tribunal directed both parties to take necessary steps to complete the sale in terms of the liquidation regulations and the terms of sale advertised by the Liquidator. The IA No. 754/2020 was disposed of accordingly, with instructions for the Liquidator to execute the Certificate of Sale and deliver the assets once the full payment is made.