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2019 (7) TMI 1143 - AT - Insolvency and BankruptcyValidity of Liquidation Order u/s 33 of the Insolvency and Bankruptcy Code, 2016 - no resolution plan - Appellant submits that the Corporate Debtor (M/s BKR Hotels Resorts Pvt. Ltd.) can be saved from liquidation if a Plan, which is with the Promoter is accepted - HELD THAT - We are not inclined to make any observation with regard to such Plan as it is admitted that more than 270 days have passed and in absence of any viable and feasible Resolution Plan , there was no option to the Adjudicating Authority, but to pass an order under Section 33. In the circumstances, while we are not inclined to interfere with the impugned order dated 3rd May, 2019 directing the Liquidator to act, it will be open to the Appellant/ Members to propose any arrangement/ scheme in terms of Section 230 of the Companies Act, 2013. Appeal disposed off.
Issues Involved:
1. Challenge to liquidation order under Section 33 of the Insolvency and Bankruptcy Code, 2016. 2. Possibility of saving the Corporate Debtor through a Resolution Plan. 3. Application of Section 230 of the Companies Act, 2013 during liquidation. 4. Role and duties of the Liquidator during the liquidation process. 5. Steps to be taken for the revival of the Corporate Debtor. Detailed Analysis: 1. Challenge to Liquidation Order under Section 33 of the Insolvency and Bankruptcy Code, 2016: The Appellant, Promoter of M/s BKR Hotels & Resorts Pvt. Ltd. (Corporate Debtor), challenged the order dated 3rd May 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Single Bench, Chennai, which directed the liquidation of the Corporate Debtor under Section 33 of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The Appellate Tribunal noted that more than 270 days had passed without any viable and feasible Resolution Plan, leaving no option but to pass the liquidation order. 2. Possibility of Saving the Corporate Debtor through a Resolution Plan: The Appellant's counsel argued that the Corporate Debtor could be saved from liquidation if a plan proposed by the Promoter was accepted. However, the Tribunal did not make any observations regarding this plan due to the expiration of the stipulated period for resolution. 3. Application of Section 230 of the Companies Act, 2013 during Liquidation: The Tribunal referred to its previous judgment in "Y. Shivram Prasad vs. S. Dhanapal & Ors." and "S.C. Sekaran v. Amit Gupta & Ors.," emphasizing that during liquidation, the Liquidator must take steps to ensure the company remains a going concern. It highlighted that Section 230 of the Companies Act, 2013, allows for a compromise or arrangement with creditors or members, even during liquidation, to revive the Corporate Debtor. 4. Role and Duties of the Liquidator during the Liquidation Process: The Tribunal outlined the duties of the Liquidator, including verifying claims, taking control of the Corporate Debtor's assets, and carrying on the business for beneficial liquidation. The Liquidator must also take steps under Section 230 of the Companies Act, 2013, to propose a compromise or arrangement with creditors and members before proceeding with the sale of assets. 5. Steps to be Taken for the Revival of the Corporate Debtor: The Tribunal emphasized that liquidation should be the last resort. The Liquidator should first attempt to revive the Corporate Debtor through a compromise or arrangement under Section 230 of the Companies Act, 2013. If this fails, the Liquidator should sell the business as a going concern. Only if these steps are unsuccessful should the Liquidator proceed with the outright sale of the company's assets. Conclusion: The Appellate Tribunal upheld the liquidation order but allowed the Appellant and members to propose an arrangement or scheme under Section 230 of the Companies Act, 2013. The Liquidator was directed to follow the steps outlined for the revival of the Corporate Debtor before proceeding with liquidation. The appeal was disposed of with these observations, and no costs were awarded.
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