2022 (3) TMI 596 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The primary object of IBC is resolution and liquidation is the last resort. At the same time keeping the timelines prescribed under the IBC is paramount, lest asset value gets deteriorated. Therefore, taking into consideration the provisions of law as well as the documents on record, this Adjudicating Authority is of the view that since the efforts to obtain resolution of the Corporate Debtor have failed and the only option left, under the circumstances being early liquidation process, we allow this petition, directing the liquidation of the Corporate Debtor. The Liquidator appointed would sincerely endeavour to sell the Corporate Debtor as a going concern without delay however, by observing the relevant provisions contained in IBC as well as in IBBI (Liquidation Process) Regulations and thus ensure that one of the objects of the IBC viz. maximization of the assets of the Corporate Debtor is not diluted. The Corporate Debtor i.e. M/s. MBS Impex Private Limited shall be liquidated in the manner laid down in Chapter-III of the Code - Application allowed.

Summary

Issues: Application for liquidation of M/s. MBS Impex Private Limited under Section 33(2) of the Insolvency and Bankruptcy Code, 2016.

The Tribunal admitted the petition for Corporate Insolvency Resolution Process (CIRP) of the Company and appointed an Interim Resolution Professional. Due to lack of cooperation from the Directors of the Corporate Debtor and delays caused by the COVID-19 lockdown, the CoC voted in favor of liquidation by 100%. Despite attempts for settlement, no progress was made. The Applicant confirmed that no resolution plan was approved within the prescribed timeline. The Tribunal emphasized that resolution is the primary goal of IBC, but timely action is crucial to prevent asset devaluation, leading to the decision for liquidation.

The Tribunal referenced the Supreme Court ruling emphasizing the importance of selling a firm as a going concern to maximize creditor realization and prevent value destruction due to delays. The appointed Liquidator was directed to sell the Corporate Debtor without delay, following IBC and IBBI regulations to maximize asset value. The order allowed the liquidation of the Corporate Debtor and appointed the Resolution Professional as the Liquidator. Specific directions were given regarding the cessation of moratorium, legal proceedings, transfer of powers to the Liquidator, cooperation from personnel connected with the Corporate Debtor, fee entitlement of the Liquidator, and notification to relevant authorities. The order also served as a discharge notice to officers, employees, and workmen of the Corporate Debtor, except in cases where business continuity is maintained during liquidation.