2022 (5) TMI 911 - Tri - Insolvency and Bankruptcy

Seeking Liquidation of Corporate Debtor - seeking appointment of Liquidator for initiation of Liquidation process of the Corporate Debtor - Prescribed period for filing application - applicability of Section 33(1) or Section 33(2) of IBC - HELD THAT - In the present case, the Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted on 02.08.2019 and the period of 180 days were completed on 28.01.2020. As per Order dated 14.01.2020 in IA No. 23/2020 this Adjudicating Authority has allowed to extend the CIRP period by 90 days till 27.04.2020. Due to Covid-19 pandemic, lock down was imposed from 25.03.2020 till 31.05.2020 in Bengaluru, thus the CIRP was extended to expire on 04.07.2020. The IA No. 240/2020 filed by the Resolution Professional seeking to extend the CIRP period by 30 days, thus the CIRP has expired on 04.09.2020. The present application is filed on 09.09.2020 i.e., after the expiry of the CIRP period. Hence, this application shall be considered under Section 33(1), but not under Section 33(2). Appointment of Liquidator - HELD THAT - Section 34(1) of the Code provides that where the Adjudicating Authority passes an order for liquidation of the Corporate Debtor under Section 33, the Resolution Professional appointed for the CIRP shall, subject to submission of written consent, act as the Liquidator for the purpose of Liquidation. Section 34(4)(a) of the Code states that the resolution plan submitted by the resolution professional was rejected for failure to meet the requirements, the Adjudicating Authority shall by order replace the RP - In the present case, it is stated in the application that the plan submitted by the Resolution Professional was not approved in the CoC meeting and the final Resolution Plan was rejected by the CoC on 02.09.2020. Sub Section (7) of Section 34 of the Code says that the Adjudicating Authority shall, on receipt of the proposal of the Board for the appointment of an Insolvency Professional as Liquidator by an order appoint such Insolvency Professional as Liquidator. Application admitted.

Issues Involved:
1. Application for Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016.
2. Timeline and proceedings of the Corporate Insolvency Resolution Process (CIRP).
3. COVID-19 pandemic impact on CIRP timelines.
4. Submission and rejection of Resolution Plans.
5. Voting outcomes and decisions of the Committee of Creditors (CoC).
6. Appointment of Liquidator.
7. Compliance with regulations and procedural directives.

Detailed Analysis:

1. Application for Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the Resolution Professional (RP) of the Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016, seeking an order for the liquidation of the Corporate Debtor and the appointment of a Liquidator.

2. Timeline and Proceedings of the Corporate Insolvency Resolution Process (CIRP):
The CIRP was initiated on 02.08.2019 following the admission of CP (IB) No. 220/BB/2018. The RP received the order on 05.09.2019, and the public announcement was made on 07.09.2019. The first CoC meeting was held on 03.10.2019, and the RP was appointed. Subsequent extensions and invitations for Expressions of Interest (EOI) were issued, with the CIRP timeline extended multiple times due to various factors, including the COVID-19 pandemic.

3. COVID-19 Pandemic Impact on CIRP Timelines:
The lockdown due to COVID-19 from 25.03.2020 to 31.05.2020 impacted the CIRP timelines. As per the orders from the Supreme Court and NCLAT, the lockdown period was excluded from the CIRP timeline, extending it up to 04.07.2020.

4. Submission and Rejection of Resolution Plans:
The RP received a resolution plan from a Prospective Resolution Applicant on 06.03.2020, which was revised multiple times due to defects. The final revised plan was submitted on 03.07.2020 but was rejected by the CoC on 02.09.2020. Consequently, no resolution plan was approved for the Corporate Debtor.

5. Voting Outcomes and Decisions of the Committee of Creditors (CoC):
In the 11th CoC meeting on 29.08.2020, the resolution for liquidation and the appointment of a liquidator did not receive the required 66% voting share. The resolution for liquidation received 57.18% votes in favor, falling short of the required threshold. Similarly, resolutions for appointing the existing RP or a new RP as Liquidator also failed to achieve the necessary voting share.

6. Appointment of Liquidator:
Given the failure to appoint a liquidator with the required voting share, the Tribunal decided to appoint a new RP from an approved panel. Mr. Konduru Prasanth Raju was selected as the Liquidator.

7. Compliance with Regulations and Procedural Directives:
The Tribunal directed compliance with various regulations, including Regulation 39B, 39C, and 39D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Liquidator was instructed to manage liquidation costs, assess the sale as a going concern, and adhere to the fee structure as per the regulations.

Conclusion:
The Tribunal ordered the liquidation of the Corporate Debtor under Section 33(1) of the Insolvency and Bankruptcy Code, 2016. The Liquidator was directed to follow specific procedural steps, including public announcements, filing preliminary and progress reports, and ensuring compliance with relevant regulations. The application I.A. No. 357 of 2020 was disposed of, and the order was communicated to the relevant parties.

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