2021 (11) TMI 250 - Tri - Insolvency and Bankruptcy

Liquidation of the Corporate Debtor - no resolution plan has been received by Corporate Debtor - Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - On the perusal of the Application and the documents enclosed therein it is found, the RP has complied with the procedure laid down under the Code; Regulations made thereunder. The reasons assigned in the petition with regards to taking the decision of liquidation of Corporate Debtor by COC appears to be convincing. On verification, it is found that this is a fit case to pass liquidation order under sub-section 1 of section 33 of the Code for liquidation in the absence of any resolution plan. Application allowed.

Summary

Issues:
Liquidation of Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The Applicant/Resolution Professional filed an application seeking liquidation of the Corporate Debtor as no resolution plan was received. The Adjudicating Authority had earlier directed initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Various advertisements were published inviting Expression of Interest (EoI) and submission of claims. Despite these efforts, only one Resolution Plan was received, which was later rejected by the Committee of Creditors (CoC). The CoC, in its meeting, decided that revival of the Corporate Debtor was not feasible due to the lack of business activity, outdated assets, and excessive liabilities. Consequently, with 67% voting rights, the CoC passed a resolution for liquidation, leading to the Applicant filing the current application.

The Resolution Professional had complied with the procedures under the Code and regulations. The reasons provided by the CoC for opting for liquidation were found to be convincing. Considering the absence of any approved resolution plan, the Tribunal deemed it a fit case for passing a liquidation order under Section 33 of the Code. Consequently, the Tribunal allowed the application, appointed the Resolution Professional as the Liquidator, specified the fees, and directed the initiation of the liquidation process in accordance with the relevant regulations. All powers of the Board of Directors, key managerial personnel, and partners of the Corporate Debtor were vested with the Liquidator. The personnel of the Corporate Debtor were instructed to cooperate with the Liquidator, and legal proceedings against the Corporate Debtor were restricted, except with the liquidator's approval. The order also served as a discharge notice to the officers, employees, and workmen of the Corporate Debtor, except for ongoing business operations managed by the Liquidator.