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2023 (3) TMI 895 - Tri - Insolvency and BankruptcySeeking early dissolution of the Corporate Debtor - CD cannot be continued as going concern as it was not functional at the time of initiation of the CIRP process - no cooperation from the Directors of the Corporate Debtor since the books of accounts not furnished to the IRP - no cooperation from the Committee of Creditors who are not attending the CoC Meetings and not ready to contribute the cost of CIRP - no liquid assets with the Corporate Debtor to cover the cost of the CIRP and liquidation process. HELD THAT - As the CIRP period is already over and no resolution plan is pending or approved for our consideration and as the maximum period prescribed under Section 12 of the Code is already over taking resort to Section 33(1)(a), it is necessary to order for liquidation of the Corporate Debtor. Application allowed.
Issues Involved:
The issues involved in this judgment are the early dissolution of the Corporate Debtor and the subsequent liquidation process. Early Dissolution of Corporate Debtor: The Interim Resolution Professional filed an application seeking the early dissolution of the Corporate Debtor due to various reasons. Firstly, the Corporate Debtor was not functional at the time of the initiation of the Corporate Insolvency Resolution Process (CIRP). Secondly, there was a lack of cooperation from the Directors and the Committee of Creditors, who failed to attend meetings and contribute to the CIRP cost. Additionally, the Corporate Debtor had no liquid assets to cover the expenses of the CIRP and liquidation process. Operational Details and Lack of Cooperation: The Applicant found that the business of the Corporate Debtor was not operational, with the last balance sheet filed in 2017 and subsequent non-compliance with MCA records. Despite efforts to contact the Corporate Debtor and Suspended Directors, there was no response. The Directors were also associated with other companies that had been struck off by MCA, indicating a lack of transparency. The Committee of Creditors, mainly comprising Financial Creditors, showed reluctance to contribute to the CIRP cost, leading to delays and hindrances in the resolution process. Creditors' Claims and CoC Meetings: A total of 76 creditors submitted claims, with Financial Creditors claiming Rs. 6,49,50,759 and Operational Creditors claiming Rs. 1,08,06,358. Several CoC meetings were conducted, but participation was limited, with lack of cooperation from members in contributing to the CIRP cost. Despite reminders and follow-ups, the CIRP cost remained unpaid, affecting the progress of the resolution process. Legal Provisions and Decision for Liquidation: The Tribunal analyzed relevant sections of the Insolvency and Bankruptcy Code, particularly Section 54 and Section 33(1), which govern the dissolution and liquidation processes. Considering the absence of a resolution plan within the prescribed period and the completion of the CIRP timeline, the Tribunal ordered the liquidation of the Corporate Debtor. The Liquidator was appointed to oversee the liquidation process, with specific directions to adhere to the provisions of the IBC, investigate financial affairs, and communicate the order to relevant authorities. Conclusion: The Tribunal's decision to order the liquidation of the Corporate Debtor was based on the lack of progress in the resolution process, non-compliance from stakeholders, and the absence of a viable resolution plan within the stipulated timeline. The appointment of the Liquidator marked the beginning of the liquidation process, with detailed instructions to ensure compliance with legal requirements and thorough investigation of financial affairs.
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