2021 (7) TMI 1078 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The reasons assigned in the application with respect to initiating liquidation of the corporate debtor appears to be genuine in the present market scenario and convincing. Apart from that the period of CIRP has already expired long back without any resolution plan and therefore, there is no option other than liquidation of the corporate debtor although there was no voting of the CoC for liquidation of the corporate debtor. The liquidation is allowed - application allowed.

Summary

Issues Involved:
- Liquidation application under Section 33(2) of the Insolvency and Bankruptcy Code, 2016
- Appointment of Resolution Professional and Committee of Creditors
- Valuation of assets by Registered Valuers
- Expression of Interest (EoI) and submission of Resolution Plans
- Approval and withdrawal of Resolution Plan leading to liquidation
- Appointment of Liquidator and initiation of liquidation process
- Directions for conduct of liquidation proceedings

Liquidation Application under Section 33(2) of the Insolvency and Bankruptcy Code, 2016:
The Tribunal considered an application filed by the Resolution Professional seeking liquidation of the Corporate Debtor under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. The Tribunal noted that the Corporate Insolvency Resolution Process (CIRP) had expired without any resolution plan, leading to the unavoidable conclusion of liquidation. Despite the absence of a CoC vote for liquidation, the Tribunal found the reasons for liquidation initiation genuine and convincing in the current market scenario. The Tribunal allowed the application for liquidation and appointed the Resolution Professional as the Liquidator under Section 34(1) of the Code.

Appointment of Resolution Professional and Committee of Creditors:
The Resolution Professional had been appointed during the 2nd CoC meeting, following the admission of the petition under Section 7 of the Code. The CoC had admitted claims of financial creditors and initiated the CIRP process. Subsequently, Expression of Interest (EoI) was published, and Resolution Plans were submitted by prospective resolution applicants. The successful resolution applicant revised the plan based on CoC advice and received approval. However, due to the withdrawal of the resolution plan by the applicant, the company moved towards liquidation automatically.

Valuation of Assets by Registered Valuers:
Four Registered Valuers were appointed to determine the fair value and liquidation value of the Corporate Debtor's assets. The valuers submitted their reports, assessing the fair value and liquidation value of the assets on specific dates. This valuation process was crucial in the resolution and liquidation proceedings.

Directions for Conduct of Liquidation Proceedings:
The Tribunal provided detailed directions for the conduct of the liquidation process, including the entitlement of the Liquidator to fees as per regulations, the cessation of powers of the board of directors and key managerial personnel, and the issuance of a Public Notice for liquidation. The Liquidator was vested with the powers previously held by the Corporate Debtor's management. Additionally, the Tribunal directed cooperation from the Corporate Debtor's personnel during the liquidation process and restricted legal proceedings against the Corporate Debtor, except with the liquidator's approval.

Conclusion:
The Tribunal's judgment highlighted the progression from CIRP to liquidation due to the withdrawal of the resolution plan. The detailed analysis covered the appointment of Resolution Professional, valuation of assets, submission and approval of Resolution Plans, and the subsequent initiation of the liquidation process with specific directions for the Liquidator. The Tribunal's decision emphasized the adherence to the Code's provisions and regulations governing the insolvency and liquidation processes.