2020 (3) TMI 96 - Tri - Insolvency and Bankruptcy

Liquidation order - provisions of section 33(1) of the Code - HELD THAT - The Resolution Professional and the CoC have made all efforts to revive the operations of CD but in vain. The Adjudicating Authority has also exercised its discretion in granting sufficient time in order to exhaust all possibility of getting solution to the issue in question. Therefore, there is no other alternative for the Adjudicating Authority except to initiate Liquidation proceedings, as per extant provisions of Code, in respect of Corporate Debtor, and the delay occurred till this date is deemed to be condoned in the interest of justice. Application disposed off.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Appointment and actions of Interim Resolution Professional (IRP) and Resolution Professional (RP)
3. Submission and evaluation of Resolution Plans
4. Rejection of Resolution Plans by Committee of Creditors (CoC)
5. Liquidation of the Corporate Debtor
6. Appointment of Liquidator

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The case was initiated by a financial creditor, M/s. Edelweiss Asset Reconstruction Company Limited (EARCL), under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, due to a default amounting to ?107,95,37,383/- by the Corporate Debtor, M/s. Falcon Tyres Limited. The petition was admitted on May 1, 2018, initiating CIRP and appointing Mr. Vijay Kumar V. Iyer as the Interim Resolution Professional (IRP).

2. Appointment and Actions of Interim Resolution Professional (IRP) and Resolution Professional (RP):
Following the appointment of the IRP, a public announcement was issued calling upon creditors to submit their claims. The Committee of Creditors (CoC) was constituted, and Mr. Savan Godiawala was later appointed as the Resolution Professional (RP) replacing the erstwhile IRP. The RP prepared an Information Memorandum and invited prospective Resolution Applicants to submit Resolution Plans.

3. Submission and Evaluation of Resolution Plans:
Despite multiple extensions for submission deadlines, the only Resolution Plan received from Maple Tree Leather Goods Private Limited was found non-compliant with the mandatory provisions of the Code, CIR regulations, and the process memorandum. The CoC, after detailed discussions and multiple addendums to the Resolution Plan, found the plan non-viable and rejected it.

4. Rejection of Resolution Plans by Committee of Creditors (CoC):
The CoC, consisting of six members, rejected the Resolution Plan with a majority of 99.3% votes. The plan was deemed not credible, capable, or genuine, and failed to balance the interests of all stakeholders. The CoC decided to authorize the RP to file an application for liquidation of the Corporate Debtor.

5. Liquidation of the Corporate Debtor:
The Adjudicating Authority noted that all possibilities to get a viable Resolution Plan were exhausted. The statutory period for CIRP, including extensions, had lapsed. The CoC's decision to reject the Resolution Plan was found to be in line with the commercial wisdom principle, as upheld by the Supreme Court in K. Sashidhar v. Indian Overseas Bank and Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta. Consequently, the Tribunal ordered the liquidation of the Corporate Debtor under Section 33 of the IBC.

6. Appointment of Liquidator:
Mr. Shivadutt Bannanje was appointed as the Liquidator for the Corporate Debtor. The Liquidator was directed to issue a public announcement regarding the liquidation and to adhere strictly to the provisions of the Code and the rules framed by the Insolvency and Bankruptcy Board of India (IBBI).

Conclusion:
The Tribunal concluded that despite exhaustive efforts to revive the Corporate Debtor, no viable Resolution Plan was received. The CoC's decision to reject the Resolution Plan was upheld, and liquidation proceedings were initiated. The Tribunal emphasized the importance of adhering to the commercial wisdom of the CoC and the statutory provisions of the IBC. The Liquidator was appointed to proceed with the liquidation process, ensuring compliance with the Code and protecting the interests of all stakeholders.

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