2022 (3) TMI 455 - Tri - Insolvency and Bankruptcy

Liquidation of the Corporate Debtor - Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The liquidation has to follow as recommended by the Committee of Creditors in terms of provisions of Section 33(1) of the Code. Adherence to statutory requirement has to be in toto. When the language of the Code is clear and explicit the Adjudicating Authority must give effect to it whatever may be the consequences and in present case the consequence is liquidation of Corporate Debtor. In the factual background, since there is no resolution plan, period of CIRP has since been ended without any approved resolution plan, the payer for liquidation of the corporate debtor under Section 33 of the Code is hereby allowed. It is ordered that liquidation of the corporate debtor, namely M/s. R.K. Silk Mills Pvt. Ltd. shall be commenced in the manner laid down in the Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 - Application allowed.

Issues:
1. Application for liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016.
2. Consideration of extension of time for Corporate Insolvency Resolution Process (CIRP) or initiation of liquidation.
3. Proposal for submission of resolution plan by operational creditors after the deadline.
4. Approval of liquidation process by Committee of Creditors.
5. Appointment of Liquidator in accordance with the provisions of the Code.
6. Compliance with statutory requirements for liquidation.

Analysis:

1. The application was filed by the Resolution Professional under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016, seeking directions for the liquidation of the Corporate Debtor, R.K. Silk Mills India Limited.

2. The Committee of Creditors considered the extension of the time limit for the Corporate Insolvency Resolution Process (CIRP) due to the COVID-19 lockdown situation and eventually approved the initiation of the liquidation process as per Section 33 of the Code.

3. Operational creditors proposed to submit a resolution plan after the deadline, requesting condonation of delay. The Committee of Creditors decided to allow them to access eligibility criteria and submit the plan by a specified date.

4. After the non-receipt of the resolution plan by the deadline, the Committee of Creditors approved the liquidation process against the Corporate Debtor with 100% voting rights.

5. The Resolution Professional, eligible to be appointed as a Liquidator, proposed his appointment as per Section 34 of the Code, which was approved by the Committee of Creditors with 75.7% voting rights.

6. The Adjudicating Authority emphasized adherence to statutory requirements for liquidation under Section 33(1) of the Code, highlighting the necessity to follow the provisions strictly. In the absence of an approved resolution plan, the order for liquidation was granted.

7. The detailed directions for the commencement of liquidation were provided, including the appointment of the Liquidator, issuance of a Public Announcement, communication to relevant authorities, initiation of the liquidation process, investigation of financial affairs, disposal of pending applications, and submission of a Preliminary Report within the specified timeline.

8. The order concluded by instructing the communication of the order to financial creditors, corporate debtor, and the Liquidator for further action and compliance with the liquidation process as per the relevant regulations.

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