2021 (12) TMI 342 - Tri - Insolvency and Bankruptcy

Seeking to replace Respondent and appoint some other person as liquidator in the interest of the creditors - Section 60(5) of the Insolvency and Bankruptcy Code 2016 - HELD THAT - It is seen that this Tribunal after taking into consideration the piquant situation that the Corporate Debtor is undergoing, after two Scheme proponents have withdrawn their proposal, has passed an order and thereby granted 90 days' time to complete the entire process. It is also seen from the records that the Respondent has filed two applications against the Scheme proponents who have withdrawn the Scheme after submitting the same before the CoC, seeking direction to pay a sum of ₹ 2 Crore into the Liquidation account This Tribunal does not wish to traverse through the allegations made by the Applicant, since any orders passed will adversely affect the timelines set by this Tribunal - Application disposed off.

Issues:
- Application filed seeking replacement of the liquidator in the interest of creditors.
- Allegations of negligence and failure to protect creditors' interests against the current liquidator.
- Dispute over liquidation costs and approval of schemes by Committee of Creditors.
- Allegations of deliberate inaction by the liquidator and failure to follow CoC decisions.
- Request for appointment of a new liquidator due to alleged improper actions.

Analysis:

1. Application for Replacement of Liquidator:
The Liquidator of a company filed an application seeking relief under Section 60(5) of the Insolvency and Bankruptcy Code 2016 to replace the current liquidator in the matter of a company under liquidation. The application requested the appointment of a new person as liquidator in the interest of creditors, citing concerns over the handling of the liquidation process.

2. Allegations of Negligence and Failure to Protect Creditors' Interests:
The applicant alleged that the current liquidator had been negligent in their duties and failed to properly care for the assets of the company under liquidation. It was claimed that vital machinery parts were missing, and the liquidator did not take necessary steps to retrieve them. These alleged actions were believed to have caused prejudice to the stakeholders' interests.

3. Dispute Over Liquidation Costs and Approval of Schemes:
There was a dispute regarding the approval of schemes by the Committee of Creditors (CoC) and the liquidation costs. The liquidator insisted on payment of additional liquidation costs, which was rejected by one scheme applicant but approved by another. This led to a situation where different schemes were presented for approval, with conflicting views on the liquidation costs.

4. Allegations of Deliberate Inaction and Failure to Follow CoC Decisions:
The applicant accused the current liquidator of deliberately not proceeding with the decision of the CoC, which could have resulted in a resolution plan and partial payment to creditors by that time. It was suggested that the liquidator acted for personal benefit and left stakeholders in a precarious position, leading to a request for selling the company's assets as a 'going concern.'

5. Request for Appointment of a New Liquidator:
Due to the alleged improper actions and inaction by the current liquidator, the applicant sought the appointment of a new person as the liquidator for the company under liquidation. The application highlighted the failure of the current liquidator to protect the creditors' interests and requested a change in the liquidator to ensure proper handling of the liquidation process.

In conclusion, the Tribunal acknowledged the concerns raised by the applicant but refrained from making any immediate decisions that could affect the ongoing processes. The Tribunal emphasized that the regulator, IBBI, has the authority to address any disciplinary issues with the Resolution Professional or Liquidator. The application was disposed of with directions to address the lapses during future proceedings related to the withdrawn schemes.

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