2022 (4) TMI 779 - Tri - Insolvency and Bankruptcy

Liquidation of the Corporate Debtor Company - sub-section 1 of section 33 of I B Code - HELD THAT - On reading the Application and the documents enclosed therein, it is clear that, the RP has complied with the procedure laid under the Code read with Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (Regulations), and thus this case is fit to pass liquidation order under sub-section 1 of section 33 of the Code as no resolution plan has been submitted before the Adjudicating Authority by the Resolution Professional. Application allowed.

Summary

Issues: Application for Liquidation, Appointment of Liquidator, Condonation of Delay

Application for Liquidation:
The application filed by the Resolution Professional (RP) sought the liquidation of the Corporate Debtor Company after the admission of the Corporate Insolvency Resolution Process (CIRP) on 3rd January, 2020. Despite efforts to invite Expression of Interest (EOIs) from Prospective Resolution Applicants (PRAs), no EOIs were received. Consequently, the Committee of Creditors (CoC), being the sole Financial Creditor, resolved to liquidate the company and appointed Mr. Bhavesh Mansukhbhai Rathod as the Liquidator. The appointment was made in accordance with Section 22(2) of the Insolvency and Bankruptcy Code, 2016, requiring a majority vote of not less than sixty-six per cent of the voting share of the creditors for such decisions. Mr. Rathod, who was the Interim Resolution Professional, consented to be appointed as the Resolution Professional (RP) and his fees were fixed at INR 25,000/-.

Condonation of Delay:
The Applicant sought a condonation of a 53-day delay in filing the liquidation application, citing various grounds for the delay. These reasons included delays due to the pandemic, the office location of the CoC and RP, regulatory provisions allowing for the exclusion of lockdown periods, and the partial lockdown situation in Maharashtra. The Applicant also referenced a precedent set by the Hon'ble NCLAT in a previous case, allowing for the exclusion of a certain number of days for timeline calculations. The Tribunal was satisfied with the explanations provided and granted the condonation of the delay, proceeding to order the liquidation of the Corporate Debtor.

Appointment of Liquidator:
The Tribunal, after considering the submissions and documents, ordered the liquidation of the Corporate Debtor as no resolution plan had been submitted. The Resolution Professional was appointed as the Liquidator in accordance with Section 34(1) of the Code. The order directed the Liquidator to manage the liquidation process, with all powers of the Board of Directors and key managerial persons ceasing to exist and vesting with the Liquidator. The personnel of the Corporate Debtor were instructed to cooperate with the Liquidator, who would be entitled to fees for conducting the liquidation proceedings. Legal proceedings against the Corporate Debtor were restricted, except with the approval of the Adjudicating Authority. The liquidation order was deemed a notice of discharge for officers, employees, and workmen of the Corporate Debtor, except for ongoing business activities managed by the Liquidator.

Conclusion:
The Tribunal allowed and disposed of the application, granting the condonation of the delay and ordering the liquidation of the Corporate Debtor with specific directions regarding the appointment and powers of the Liquidator, cooperation from personnel, fee structure, and legal proceedings during the liquidation process.