2022 (7) TMI 460 - Tri - Insolvency and Bankruptcy

Liquidation order - COC has rejected the resolution plans submitted by all the Prospective Resolution Applicants - Section 33 r.w. Section 34 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is noted that to resolve the Corporate Debtor, sufficient efforts were made by the applicant as well as the CoC. Three resolution plans were received from the Prospective Resolution Applicants but the sole member of CoC has rejected all the resolution plans submitted by the Prospective Resolution Applicants in its 9th meeting dated 18.02.2022 (through e-voting dated 20.02.2022). The CoC in that very meeting also resolved to liquidate the Corporate Debtor by 100% vote. It is also resolved that the applicant herein be appointed as a Liquidator. A copy of the written consent of the liquidator is also available on record wherein the applicant has stated that no Disciplinary Proceeding is filed or pending against the Applicant. The CoC also passed the resolution that the liquidator may first explore selling the Corporate Debtor as a going concern under Regulation 39C CIRP Regulations read with regulation 32 (e ) of the Liquidation Regulations and also passed a resolution under regulation 39B of CIRP Regulations read with regulation 2A of Liquidation Regulations to contribute estimate liquidation cost of Rs. 11,00,000/- for 6 (Six) months. There is no option but to pass an order of the liquidation in view of Section 33 (2) of the IB Code as the sole member of CoC has passed a resolution to liquidate the Corporate Debtor. The liquidation of the Corporate Debtor is ordered - application allowed.

Issues:
1. Liquidation order under Section 33 r.w. Section 34 of the Insolvency and Bankruptcy Code, 2016.
2. Contribution of liquidation costs by CoC.
3. Appointment of Liquidator and responsibilities.
4. Ceasing of powers of Board of Directors and key managerial persons.
5. Cooperation required from personnel and Liquidator.
6. Fees for liquidation proceedings.
7. Legal proceedings against Corporate Debtor.
8. Notice of discharge to officers, employees, and workmen.

Analysis:

Issue 1: Liquidation Order
The application was filed for the order of liquidation as the CoC rejected all resolution plans. Despite efforts to receive resolution plans, the CoC decided to liquidate the Corporate Debtor with 100% votes. The Adjudicating Authority granted the order of liquidation, appointing the Resolution Professional as the Liquidator to complete the process as per the Insolvency and Bankruptcy Code, 2016.

Issue 2: Contribution of Liquidation Costs
The CoC resolved to contribute the estimated liquidation cost for six months. The Liquidator was directed to explore selling the Corporate Debtor as a going concern, as per the regulations. The compliance application was filed, and the CoC agreed to contribute the liquidation cost, ensuring proper procedures were followed.

Issue 3: Appointment of Liquidator and Responsibilities
The Resolution Professional was appointed as the Liquidator for the Corporate Debtor. All powers of the Board of Directors and key managerial persons ceased to exist, transferring to the Liquidator. The Liquidator was directed to manage the liquidation process and cooperate with government agencies as required.

Issue 4: Ceasing of Powers
Following the liquidation order, the powers of the Board of Directors, key managerial persons, and partners of the Corporate Debtor ceased to exist, now vested with the Liquidator to oversee the liquidation process effectively.

Issue 5: Cooperation and Responsibilities
The personnel of the Corporate Debtor were directed to cooperate with the Liquidator, and the Liquidator was instructed to provide cooperation to government agencies as needed. Fees for the conduct of liquidation proceedings were determined as per the CoC meeting.

Issue 6: Fees for Liquidation Proceedings
The Liquidator would charge fees as determined in the CoC meeting held on 18.02.2022 for the conduct of the liquidation proceedings, ensuring transparency and adherence to regulations.

Issue 7: Legal Proceedings
No suit or legal proceedings could be instituted against the Corporate Debtor from the date of the order, except by the Liquidator with prior approval. This safeguarded the interests of all parties involved during the liquidation process.

Issue 8: Notice of Discharge
The liquidation order served as a notice of discharge to the officers, employees, and workmen of the Corporate Debtor, except for ongoing business managed by the Liquidator. The order was to be uploaded on the official website and shared with relevant parties promptly.

This comprehensive analysis highlights the key aspects of the judgment, covering the liquidation order, contribution of costs, appointment of the Liquidator, ceasing of powers, cooperation requirements, fees, legal proceedings, and notice of discharge, ensuring a detailed understanding of the legal proceedings and outcomes.

← Previous Next →