2022 (2) TMI 550 - Tri - Insolvency and Bankruptcy

Liquidation of the Corporate Debtor - no resolution plan was received - Appointment of liquidator - section 33(2) of the Insolvency Bankruptcy Code, 2016 - HELD THAT - Section 33 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 100% voting share to liquidate the Corporate Debtor. Prayers as sought for in application filed by Mr. Anshul Gupta RP of Shamken Cotsyn Limited, the Corporate Debtor, is allowed and the Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code read with sub-section (1) thereof - liquidator as provided under section 34(1) of the Code is appointed - application allowed.

Summary

Issues:
1. Application for liquidation of Corporate Debtor due to lack of resolution plan.
2. Decision to proceed with liquidation by the Committee of Creditors.
3. Application to stay the decision of moving the Corporate Debtor into liquidation.

Analysis:
1. The judgment pertains to an application filed by the Resolution Professional (RP) at the behest of the Committee of Creditors (CoC) seeking liquidation of the Corporate Debtor, Shamken Cotsyn Limited, as no resolution plan was received. The RP sought orders for liquidation and appointment of a liquidator. The history of the case includes the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor following a petition by a Financial Creditor. Despite multiple attempts to receive and consider resolution plans, none were successful, leading to the CoC's unanimous decision to proceed with liquidation.

2. The Adjudicating Authority, in this case, considered the provisions of Section 33 of the Insolvency and Bankruptcy Code, 2016, which mandates the order for liquidation of the Corporate Debtor if approved by the requisite percentage of the CoC. In this instance, the CoC's unanimous decision to liquidate the Corporate Debtor was upheld by the Authority. The judgment ordered the liquidation of the Corporate Debtor, appointment of a specific liquidator proposed by the CoC, initiation of the liquidation process, cessation of powers of the Board of Directors, and compliance with regulatory procedures.

3. Additionally, another application was filed by a member of the suspended board of the Corporate Debtor, seeking a stay on the CoC's decision to move the Corporate Debtor into liquidation. The Adjudicating Authority dismissed this application, emphasizing that with no resolution plans forthcoming after an extended period, the decision to liquidate the Corporate Debtor was justified. The purpose of the Insolvency and Bankruptcy Code would be defeated if the Corporate Insolvency Resolution Process were extended indefinitely without a viable resolution plan. Consequently, the application to stay the liquidation decision was rejected.

In conclusion, the judgment resolved the applications by ordering the liquidation of the Corporate Debtor, appointing a liquidator, and dismissing the application seeking to stay the liquidation decision. The detailed analysis considered the legal provisions, the CoC's decision-making process, and the necessity for timely resolution in insolvency proceedings to uphold the objectives of the Code.