9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (2) TMI 985 - Tri - Insolvency and BankruptcyInitiating Corporate Insolvency Resolution Process - Held that - In the case in hand, it is an undisputed fact that Corporate Debtor is a going concern and has about 1178 employees and workmen on its Roll. RP has also admitted that corporate debtor is a going concern. Section 33(7) also provides that order of liquidation shall be deemed to be a notice of discharge to the officers, employees and workers of the Corporate Debtor, except when the business of the Corporate Debtor is continued during the liquidation process. Regulation 32 also provides provision for the manner of sale during liquidation process which shows that it can be by way of slump sale and slump sale means the transfer of an undertaking as a whole. In the light of the order of the Hon ble Supreme Court in case of Allahabad Bank (2000 (9) TMI 931 - SUPREME COURT OF INDIA), we pass following orders in addition to the orders made above. (1) The Liquidator shall try to dispose off the Corporate Debtor company as a going concern after publication of notice in newspaper with the reserve price which shall be equal to the total debt amount including interest and maximum period applicable for trying the sale of the Corporate Debtor as a going concern will be only three months from the date of the order, if the process of sale as a going concern is failed during this period, then process of the sale of the assets of the company will be according to the provisions of sale of asset of the Corporate Debtor prescribed under section 33, Chapter VI of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. In case it is not concluded within this period, the order of this Court directing the sale of the company as a going concern shall stand set aside and corporate debtor to be liquidated in the manner as laid down in Chapter III of the Liquidation Process provided in Insolvency & Bankruptcy Code. (2) The Liquidator is further directed to issue a public announcement stating that the Corporate Debtor is in liquidation. (3) It is also ordered that copy of the order be sent to the Registrar of Companies with which the Corporate Debtor is registered. It is further declared that subject to provision of section 52, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor. Provided that a suit or other legal proceedings may be instituted by the Liquidator on behalf of the Corporate Debtor, with the prior approval of the Adjudicating Authority. Above provision shall not apply to legal proceedings about such transactions, as may be notified by the Central Government in consultation with any Financial Sector Regulators.
Issues Involved:
1. Corporate Insolvency Resolution Process (CIRP) and its timeline. 2. Expression of interest and submission of Resolution Plan. 3. Voting on the Resolution Plan by the Committee of Creditors (CoC). 4. Proposal by employees and workers. 5. Legal provisions and compliance under Insolvency and Bankruptcy Code (IBC), 2016. 6. Liquidation process and its implications. 7. Sale of assets as a going concern. Issue-wise Detailed Analysis: 1. Corporate Insolvency Resolution Process (CIRP) and its timeline: The Corporate Debtor, Gujrat NRE Coke Limited, was admitted under section 10 of the Insolvency and Bankruptcy Code (IBC), 2016, on 7th April 2017. The initial CIRP period of 180 days was set to expire on 3rd October 2017 but was extended by another 90 days, ending on 1st January 2018. 2. Expression of interest and submission of Resolution Plan: On 22nd December 2017, the Resolution Professional (RP) received an expression of interest from RARE Asset Reconstruction Company. The draft Resolution Plan was discussed in the 11th CoC meeting on 26th December 2017 and further negotiated in the 12th CoC meeting on 28th December 2017. The revised plan was circulated for voting. 3. Voting on the Resolution Plan by the Committee of Creditors (CoC): The Resolution Plan was not approved. Eight CoC members with 14.31% voting share voted in favor, while fifteen members with 84.03% voted against, and one member with 1.67% abstained. As per section 30(4) of IBC, a Resolution Plan requires at least 75% approval from the CoC, which was not met. 4. Proposal by employees and workers: On 30th December 2017, the Chief Commercial Officer of the company, representing the employees and workers, submitted a Resolution Plan. The plan emphasized the continuation of employment and the company's operational profits. However, due to the prescribed timelines, the RP indicated it was unlikely to be considered before the deadline. 5. Legal provisions and compliance under Insolvency and Bankruptcy Code (IBC), 2016: The Resolution Plan failed to comply with section 31 of IBC, leading to its rejection. Consequently, the Corporate Debtor was to go into liquidation as per section 33 of IBC. The RP, Shri Sumit Binani, was appointed as the Liquidator, with the powers of the Board of Directors and key managerial personnel ceasing and vesting in the Liquidator. 6. Liquidation process and its implications: Section 33(7) of IBC provides that liquidation orders are deemed notices of discharge to officers, employees, and workmen, except when the business continues during the liquidation process. The affidavit filed by employees highlighted the company's operational profits and the adverse impact on 1,178 employees and their dependents if the company were liquidated. 7. Sale of assets as a going concern: Regulation 32 of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulation, 2016, allows the sale of assets in a slump sale. The Supreme Court's judgment in Allahabad Bank v. ARC Holding Ltd. was cited, emphasizing the sale of a company as a going concern to preserve employment. The Tribunal ordered the Liquidator to attempt to sell the Corporate Debtor as a going concern within three months. If unsuccessful, the assets would be sold per section 33, Chapter VI of the Liquidation Process Regulations. Additional Orders: 1. The Liquidator must publish a notice indicating the reserve price equal to the total debt amount. 2. A public announcement of the Corporate Debtor's liquidation is required. 3. A copy of the order must be sent to the Registrar of Companies, the Liquidator, the Corporate Debtor, and the IBBI. 4. Legal proceedings against the Corporate Debtor are restricted, except those initiated by the Liquidator with prior approval. This comprehensive summary encapsulates the Tribunal's judgment, preserving the legal terminology and significant phrases from the original text.
|
