2021 (10) TMI 1182 - Tri - Insolvency and Bankruptcy

Seeking dissolution of the Corporate Debtor - sections 54(1) of the Insolvency Bankruptcy Code, 2016 r/w Regulation 45(3) IBBI (Liquidation Process) Regulations, 2016 - HELD THAT - After completion of sale of assets by ARCIL, a letter dated 05.09.2019 was sent to ARCIL by the liquidator requesting for submission of asset sale report as required under Regulation 36 of the regulations along with the documents relating to the sale of assets. By the said letter, ARCIL was requested to transfer the amount of insolvency resolution process cost and liquidation cost incurred by the IRP, RP and Liquidator from the sale proceeds of the assets before applying the same towards recovery of debts. ARCIL deposited the amount of ₹ 13,08,403/- in the account of Kokama International Private Limited. (In Liquidation) on 12.12.2019 and the balance amount was adjusted against the recovery of its secured debt by ARCIL - the entire cost of insolvency resolution process and liquidation process was met by ARCIL as the company did not have any funds to meet the said costs. The Liquidator on the request made by ARCIL by letter dated 23.12.2019 reimbursed the said cost to ARCIL from the account of Kokama International Private Limited (In Liquidation). Kokama International Private Limited, the Corporate Debtor, is hereby dissolved with immediate effect - application allowed.

Summary

Issues involved:
1. Application for dissolution of Corporate Debtor under sections 54(1) of the Insolvency & Bankruptcy Code, 2016.
2. Progress in the process of liquidation.
3. Disposal of assets and distribution of proceeds.

Analysis:

1. Application for dissolution of Corporate Debtor:
The Tribunal received an Application by the Liquidator seeking dissolution of the Corporate Debtor, Kokama International Private Limited, under sections 54(1) of the Insolvency & Bankruptcy Code, 2016. The Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor had been admitted earlier, and the Liquidator had undertaken various steps in the liquidation process, including making public announcements, verifying claims, and opening a bank account in the name of the company in liquidation. The assets of the Corporate Debtor were completely liquidated, and the Liquidator submitted a final report detailing the process.

2. Progress in the process of liquidation:
After the liquidation commenced, the Liquidator took steps such as making public announcements for stakeholders to submit proof of claims and opening a bank account for the company in liquidation. The secured creditor, ARCIL, sought to realize its security interest in the assets of the company under Section 52 of the Code. Following discussions and submissions, ARCIL took possession of the secured assets and conducted e-auctions for their sale. Despite an initial failed auction, a subsequent auction was successful, resulting in the assets being sold for a value higher than the liquidation value. ARCIL deposited a portion of the sale proceeds towards insolvency resolution and liquidation costs.

3. Disposal of assets and distribution of proceeds:
The assets of the company, mortgaged to ARCIL, were sold by ARCIL after obtaining permission from the Liquidator. The sale proceeds were utilized to pay off insolvency resolution and liquidation costs. As there were no other stakeholders apart from ARCIL, who submitted a claim, and no further amount available for distribution, the insolvency resolution process cost and liquidation process cost were first paid from the sale proceeds. Subsequently, the Corporate Debtor was dissolved, and the Liquidator was discharged. The Registry was directed to forward a copy of the order to the Registrar of Companies, and the related proceedings were closed.

This detailed analysis of the judgment highlights the key aspects of the liquidation process and the eventual dissolution of the Corporate Debtor in compliance with the provisions of the Insolvency & Bankruptcy Code, 2016.