2018 (5) TMI 2185 - Tri - IBC

Liquidation order under section 33 of the Insolvency and Bankruptcy Code 2016 - HELD THAT - As per the provisions of Section 33(2) of The Code to initiate Liquidation Process, the Resolution Professional at any time during the Corporate Insolvency Resolution Process but before confirmation of Resolution Plan, intimates the AA of the decision of the Committee of Creditors to Liquidate the Corporate Debtor the Adjudicating Authority shall pass a Liquidation Order as prescribed u/s 33 of The Code. It is intimated that after due deliberations the Committee of Creditors passed a Resolution for Liquidation of the Company with 100% Voting Share in favour of the said Resolution. As far as the Valuation of the property of the Corporate Debtor is concerned, there was no confusion for initiation of Liquidation Proceedings for IRP who is now to be termed as Liquidator . Therefore, to avoid such high percentage of sacrifice, it is necessary to take a decision in favour of the Financial Creditor to initiate Liquidation Proceedings against the Corporate Debtor who had mortgaged the property and the Loan in question was granted. The Debt in question is intricately linked with the property mortgaged hence cannot be segregated in the process of Liquidation proceedings. Therefore, it is hereby authorized that the Liquidator shall take necessary steps to liquidate the assets of the Corporate Debtor, for which a Valuation Report is already on record. There may or may not be restrictions on the assets of a Corporate Debtor in the event Resolution process is commenced but right now the proceedings for Liquidation has been commenced. As a result, the assets of the corporate Debtor can be subjected to Liquidation by invoking the jurisdiction prescribed u/s 33(2) of the Code. The Resolution Professional is hereby appointed as a Liquidator', to proceed with the Liquidation Process - Application disposed off.

Summary

Issues:
1. Application under section 33 of the Insolvency and Bankruptcy Code 2016.
2. Appointment of Interim Resolution Professional and advertisement for inviting claims from creditors.
3. Admission of claim by Financial Creditor and constitution of Committee of Creditors.
4. Lack of cooperation from Directors of the Corporate Debtor and appointment of accountant for financial statements.
5. Presentation of financial statements and valuation reports to the Committee of Creditors.
6. Decision by the Committee of Creditors to liquidate the Corporate Debtor.
7. Prayer for passing an Order of Liquidation and appointment of Liquidator.
8. Intimation of Committee of Creditors' decision for liquidation to the Adjudicating Authority.
9. Authorization for the Liquidator to take necessary steps for liquidation.
10. Clarification on the distinction between Resolution Process and Liquidation Process.
11. Appointment of Resolution Professional as Liquidator for proceeding with the Liquidation Process.

Analysis:
1. The judgment pertains to an application under section 33 of the Insolvency and Bankruptcy Code 2016, where the Resolution Professional appointed in the Insolvency Resolution Process of a Corporate Debtor sought liquidation.
2. The Company Petition filed by a Financial Creditor was transferred to the National Company Law Tribunal, Mumbai, leading to the appointment of an Interim Resolution Professional who invited claims from creditors through newspaper advertisements.
3. The claim by the Financial Creditor was admitted, and a Committee of Creditors was constituted, with the Petitioner Financial Creditor being a member.
4. The Directors of the Corporate Debtor did not cooperate, necessitating the appointment of an accountant for preparing financial statements.
5. Financial statements and valuation reports were presented to the Committee of Creditors, leading to a decision to liquidate the Corporate Debtor due to the absence of any Resolution Plan.
6. The Resolution Professional sought an Order of Liquidation and appointment as Liquidator, which was confirmed by the Committee of Creditors.
7. The Committee's decision for liquidation was communicated to the Adjudicating Authority, leading to the authorization for the Liquidator to initiate necessary steps for liquidation.
8. The distinction between the Resolution Process and Liquidation Process was clarified, emphasizing the commencement of Liquidation proceedings.
9. The Resolution Professional was appointed as the Liquidator to proceed with the Liquidation Process as directed by the Tribunal, concluding the matter.