2021 (2) TMI 878 - Tri - Insolvency and Bankruptcy

Liquidation Order - section 33 (2) of the Insolvency and Bankruptcy Code, 2016 - Prescribed period for filing application - Appointment of Liquidator - Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) Prescribed period for filing application - HELD THAT - In the present case, the application under section 9 of the Insolvency and Bankruptcy Code, 2016 was admitted on 22-1-2020 and the present application is filed by the Resolution Professional on 19-8-2020. The period of 180 days were completing on 19-7-2020 but as per Notification No. IBBI/2020-21/GN/REG059 dated 20-4-2020, the period of Lockdown is excluded for the purpose of calculating the timelines in CIR Process. Hence, after excluding the lockdown period, the present application is filed within the prescribed period. Appointment of Liquidator - HELD THAT - Section 34 (1) of the Code provides that where the Adjudicating Authority passes an order for liquidation of the corporate debtor under section 33, the resolution professional appointed for the corporate insolvency resolution process shall, subject to submission of written consent act as the Liquidator for the purpose of liquidation - The Law Researcher of this Tribunal has checked the credentials of proposed Liquidator and nothing adverse has been found on record. Therefore, Mr. Amarnath is appointed as the Liquidator. Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - HELD THAT - The COC has not made compliance of Regulation 39B of the CIRP Regulations, 2016 regarding meeting of liquidation costs. The Liquidator is, therefore, directed to take necessary action under Regulation 2A of the CIRP (Liquidation Process) Regulations, 2016 regarding contributions to liquidation costs. Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - HELD THAT - The COC has not made any recommendation regarding sale of the corporate debtor as a going concern. Therefore, the Liquidator is directed to refer to Regulation 32A of the CIRP (Liquidation Process) Regulation, 2016 and take necessary action. Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) - HELD THAT - In the 4th meeting of COC, it has been resolved that liquidation fee will be paid to the Liquidator as ₹ 3,00,000/- on lump sum basis for six months. In view of the satisfaction of the conditions provided under section 33(2) of the Code, the corporate debtor Karan Processors Private Limited is directed to be liquidated in the manner as laid down in Chapter III of the Code - That as per section 33(5) of the Code and subject to section 52 of the Code, no suit or other legal proceedings shall be instituted against the corporate debtor.

Summary

Issues:
Liquidation order under section 33(2) of the Insolvency and Bankruptcy Code, 2016 for M/s Karan Processors Pvt. Ltd.

Detailed Analysis:

1. Liquidation Application: The Resolution Professional filed an application under section 33(2) of the Insolvency and Bankruptcy Code, 2016 seeking a liquidation order for M/s Karan Processors Pvt. Ltd. due to the inability to revive the company as all machinery was in a deteriorated condition, leading to a decision by the Committee of Creditors (CoC) to opt for liquidation.

2. Compliance and Evidence: The Resolution Professional submitted a compliance affidavit with photographs depicting the poor condition of the plant and machinery, supporting the decision for liquidation.

3. Legal Precedent: Referring to a judgment by the NCLAT in Praveen Kumar Nand Kumar v. VSL Securities (P.) Ltd., it was highlighted that the decision to liquidate a corporate debtor based on proper evaluation by the CoC is a business decision falling within the commercial wisdom of the CoC and not subject to judicial review.

4. Prescribed Period and Appointment of Liquidator: The application for liquidation was filed within the prescribed period, considering the exclusion of the lockdown period. The CoC resolved to appoint the Resolution Professional, Mr. Amarnath, as the Liquidator for the process of liquidation.

5. Regulations and Liquidation Process: Various regulations under the CIRP Regulations, 2016 were discussed, including the Liquidation Cost, Assessment of Sale as a going concern, and Fees of the Liquidator. Directions were given for compliance with these regulations by the Liquidator.

6. Pending Applications: The Resolution Professional confirmed the absence of any pending applications affecting the decision for liquidation, ensuring a clear path for the liquidation process.

7. Final Directions: The Tribunal directed the liquidation of M/s Karan Processors Pvt. Ltd. in accordance with the provisions of the Insolvency and Bankruptcy Code. Detailed instructions were provided regarding legal proceedings, transfer of powers to the Liquidator, cooperation from personnel, publication of public announcements, and filing of progress reports by the Liquidator.

8. Disposal of Application: The Tribunal disposed of the liquidation application, instructing the supply of the order copy to relevant parties and the Registrar of Companies for further action.

In conclusion, the judgment ordered the liquidation of M/s Karan Processors Pvt. Ltd. based on the decision of the CoC and compliance with legal provisions, appointing the Resolution Professional as the Liquidator and providing detailed directions for the liquidation process.