2021 (11) TMI 465 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - no resolution plan was approved by the Committee of Creditors - section 33(2) of the Insolvency Bankruptcy Code, 2016 - HELD THAT - Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the resolution professional, at any time during the CIRP but before confirmation of the resolution plan, intimates the Adjudicating Authority of the decision of the CoC approved by not less than sixty-six percent of the voting share, to liquidate the Corporate Debtor - In the present case, the CoC has resolved by 85.97% voting share to liquidate the Corporate Debtor. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - Application allowed.

Summary

Issues:
Liquidation of Corporate Debtor Mohan Motors Udyog Private Limited due to non-approval of resolution plan by Committee of Creditors (CoC).

Analysis:
The Tribunal received an application from the Resolution Professional, acting on CoC's instructions, seeking liquidation of the Corporate Debtor as no resolution plan was approved. The CoC had resolved by 85.97% voting share to liquidate the Corporate Debtor. The Adjudicating Authority had earlier initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor and appointed an Interim Resolution Professional, who later became the Resolution Professional. The Resolution Professional made necessary public announcements and constituted the CoC with seven financial creditors.

The CoC meetings were held, and despite receiving ten Expressions of Interest (EOIs), only one Resolution Plan was submitted, which was not approved by the CoC. Consequently, the Resolution Professional filed an application for liquidation under section 33 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority had previously extended the CIRP period due to the Covid-19 pandemic. The Resolution Professional declined to act as the liquidator for the liquidation process.

The Tribunal, in line with section 33(2) of the Code, ordered the liquidation of the Corporate Debtor. A new Liquidator was appointed, subject to possessing a valid Authorization for Assignment issued by the Insolvency Professional Agency. The Liquidator was tasked with initiating the liquidation process as per the relevant regulations. The Resolution Professional was directed to hand over all related documents to the Liquidator. The powers of the Board of Directors and key managerial persons ceased to exist, transferring to the Liquidator.

Additionally, the personnel of the Corporate Debtor were instructed to assist the Liquidator, and legal proceedings against the Corporate Debtor were restricted during the liquidation process. The liquidation order served as a discharge notice for officers, employees, and workmen, except for ongoing business matters managed by the Liquidator. The Liquidator was required to file a copy of the order with the Registrar of Companies, and the Registry was directed to inform all relevant parties. Finally, the application was disposed of as per the Tribunal's directions.