2021 (8) TMI 105 - Tri - Insolvency and Bankruptcy

Liquidation of the corporate debtor - Section 33(1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT - The CIRP of 180 days in the present matter expired on 08.09.2019 and because the corporate debtor does not have any asset/business nor have any reliable financial statement, it is seen from the provisions of IBC, 2016 is to only press the liquidation mode as provided under the provisions of section 33 of IBC, 2016. This Tribunal in the circumstances taking into consideration the provisions of law as well as on facts on record to order for liquidation of the corporate debtor and in the circumstances the corporate debtor stands liquidated and the incidence of liquidation to follow, on and from the date of this order in terms of the provisions of IBC, 2016 and more particularly as given in Chapter-III of IBC, 2016 and also in terms of Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 along with the following directions imposed. Application allowed.

Summary

Issues:
Application for liquidation of corporate debtor under Section 33(1) of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The application was filed by the Resolution Professional seeking directions for the liquidation of the corporate debtor, M/s. Saubhagya Ornaments Private Limited, under Section 33(1) of the Insolvency and Bankruptcy Code, 2016. The operational creditor, M/s. SRS Limited, had initiated the Corporate Insolvency Resolution Process against the corporate debtor, which was admitted by the tribunal. The Resolution Professional highlighted various irregularities found during the scrutiny of the corporate debtor's records, including unreliable financial statements, lack of proper books of accounts, questionable debts, absence of employees and directors, non-compliance with various regulations, and absence of physical assets like stock or inventory of jewelry. The Corporate Debtor was deemed to be a shell benami company managed by the SRS Group, with no genuine financial standing or reliable information available for resolution.

In subsequent Committee of Creditors (CoC) meetings, it was revealed that no Information Memorandum could be prepared due to the dire circumstances surrounding the corporate debtor. Various government authorities were already investigating the affairs of group companies, leading to a proposal for liquidation by the Resolution Professional. Despite the lack of a resolution plan and extension of the Corporate Insolvency Resolution Process (CIRP) period, the CoC ultimately decided to liquidate the corporate debtor through a unanimous resolution. The Resolution Professional was appointed as the Liquidator, and necessary steps were taken in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016, and related regulations.

The tribunal, considering the facts and provisions of the law, ordered the liquidation of the corporate debtor. The Liquidator was directed to issue a Public Announcement, communicate the order to relevant authorities, initiate the liquidation process, submit a Preliminary Report within the specified timeline, and comply with fiscal and regulatory requirements. The order marked the cessation of the Moratorium under Section 14 of the Code and the commencement of a fresh Moratorium under Section 33(5). The Liquidator was instructed to proceed with the liquidation process as per the Code and regulations, ensuring compliance and reporting obligations. The order was deemed a notice of discharge to the officers, employees, and workmen of the corporate debtor. Additionally, the tribunal disposed of the related application and directed timely communication of the order to all concerned parties.