2019 (11) TMI 618 - Tri - Insolvency and Bankruptcy

Liquidation order of the Corporate Debtor - Section 33 (2) of the Insolvency and Bankruptcy Code, 2015 - Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1)? HELD THAT - In the present case, the application is filed by the Resolution Professional on 25.07.2019 during the CIRP process and before confirmation of the resolution plan. The decision of the CoC to liquidate the Corporate Debtor is approved by the CoC with 99.87% of the voting share and therefore, the requirement of approval of not less than 66% of the voting share is satisfied. In view of the satisfaction of the conditions of Section 33 (2) of the Code, the liquidation order as referred to in sub clauses (i), (ii) and (iii) of clause (b) of Section 33 (1) of the Code is being passed - In view of the satisfaction of the conditions provided under Section 33(2) of the Code, the corporate debtor Gian Chand Sons Pvt.Ltd is directed to be liquidated in the manner as laid down in Chapter III of the Code.

Summary

Issues: Liquidation order sought by Resolution Professional under Section 33(2) of the Insolvency and Bankruptcy Code, 2015 for a Corporate Debtor.

Analysis:
1. The case involved a petition filed by the Resolution Professional (RP) seeking a liquidation order for the Corporate Debtor under Section 33(2) of the Insolvency and Bankruptcy Code, 2015.

2. The Corporate Insolvency Resolution Process (CIRP) was initiated by Mahavir Traders for the Corporate Debtor, and the Resolution Professional was appointed after the replacement of the Interim Resolution Professional (IRP).

3. The CIRP period had expired, and multiple attempts were made to secure a resolution plan, which were ultimately rejected by the Committee of Creditors (CoC) due to low offers from the Promoter/Director of the Corporate Debtor.

4. The CoC unanimously decided to liquidate the Corporate Debtor due to continued losses, low capacity utilization, and lack of working capital, with the Resolution Professional recommended as the Liquidator.

5. The application satisfied the conditions of Section 33(2) of the Code, leading to the passing of a liquidation order and the appointment of the Resolution Professional as the Liquidator.

6. The Liquidator's fee, as approved by the CoC, was also sanctioned in accordance with the regulations, and various directions were issued regarding the liquidation process, including the publication of a public announcement for stakeholder claims.

7. Financial Creditors were not barred from enforcing personal guarantees, and the order was to be communicated to relevant parties promptly.

This detailed analysis covers the key aspects of the judgment, including the background, decision-making process, legal provisions applied, and the directives issued for the liquidation process.