2023 (5) TMI 664 - AT - Insolvency and Bankruptcy

Seeking Liquidation of Corporate Debtor - no resolution plan received till date (by RP) - HELD THAT - The Committee of Creditors in its meeting held on 10.03.2020 took a decision with 100% vote to liquidate the Corporate Debtor. In the CoC meeting it was noted that last date for submitting the resolution plan was 26.02.2022, which date was extended till 09.03.2022, however, the Resolution Professional did not receive any plan till the time of the meeting - The Committee of Creditors noted that the Corporate Debtor is not a going concern and no plan having been received resolution was passed to liquidate. The Adjudicating Authority has allowed the application filed by the Resolution Professional for accepting the liquidation resolution - no error can be said to have been committed by the Committee of Creditors in taking decision of liquidation when no resolution plan was received by the Resolution Professional inspite of extending the date. Valuation of the Corporate Debtor - HELD THAT - The present is a case where the valuation has been conducted under the CIRP Regulation, 2016. Liquidator is obliged to consider the average of the value arrived as per Regulation 35 of the CIRP Regulation, 2016. Present is not a case where Liquidator has directed fresh valuation under Regulation 35 Sub-regulation (2) - Furthermore, in the present case, two valuation reports are already on the record, as brought on the record by the Appellant, as noted above. When the case is covered by Regulation 35(1), the Liquidator has to take the average of the estimate of the value arrived by the two Valuers. The Liquidator while proceeding to sell the assets in accordance with Liquidation Process Regulation, 2016 has to take the reserve value as per Schedule-I of the Liquidation Regulation. The reserve price has to be value of assets arrived at as per Regulation 35 (1). Liquidation order upheld - appeal disposed off.

Summary

Issues involved:
The judgment deals with the challenge against the order for liquidation of a corporate debtor, valuation of assets, and payment to financial creditors.

Liquidation Order Challenge:
The appellant, as the Promoter of the Corporate Debtor, appealed against the order for liquidation passed by the Adjudicating Authority. The Corporate Insolvency Resolution Process (CIRP) was initiated by a Financial Creditor, leading to the decision for liquidation due to the absence of a resolution plan. The Committee of Creditors unanimously resolved for liquidation, which was upheld by the Adjudicating Authority. The appellant's appeal against this order was dismissed, and subsequent attempts to settle with the Financial Creditor were unsuccessful.

Valuation of Assets:
The Appellant raised concerns regarding the valuation of the Corporate Debtor's assets. Two valuation reports were shared by the Resolution Professional after repeated requests. The reports indicated market value and liquidation value, with the Liquidator obligated to consider the average value as per regulations. The Liquidator was directed to set the reserve price based on the average of the two valuation reports received during the CIRP process.

Payment to Financial Creditors:
Although the Appellant deposited a portion of the amount due to the Financial Creditor, it was without up-to-date interest. The Financial Creditors insisted on full payment, leading to a refund of the deposited amount to the Appellant. The judgment upheld the liquidation order, directed the refund of the deposited amount, and specified the methodology for setting the reserve price during asset sale.