2021 (5) TMI 111 - Tri - Insolvency and Bankruptcy

Liquidator of Corporate Debtor - Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - seeking an order that the existing Resolution Professional to act as the Liquidator of the Corporate Debtor for the purpose of liquidation of the Corporate Debtor - HELD THAT - Apparently on reading all the pleadings and submissions made by the respective Learned Counsels, it is very clear that, CoC members and the Resolution Professional were at loggerheads. There was no co-operation or co-ordination between them. Both parties are throwing so much of allegations against each other. However, this Adjudicating Authority does not want to go into the merits of the conduct and the lapses, if any, on the part of the Resolution Professional. Since the Financial Creditors together holding 96.55% voting rights of the Corporate Debtor, has raised serious allegations against the conduct in which the CIRP against RP, it cannot be buried under the carpet. Hence, the Registry shall forward this order along with the copy of the application filed in IA/650/IB/2020 to IBBI, to verify if there are any lapses on the part of the RP in process of the CIRP - Since there are allegations by the majority of the CoC members against this particular Applicant/Resolution Professional, this RP is not appointed as a Liquidator of the Corporate Debtor. More than 330 days of the CIRP period was ended on 17.01.2021 and no Resolution Plan or any proposal is pending, and also the company is not a going concern, considering all these facts, it is ordered that the Corporate Debtor herein shall be liquidated - Application allowed.

Issues:
1. Liquidation of the Corporate Debtor under Section 33(1) of the Insolvency and Bankruptcy Code, 2016.
2. Extension of Corporate Insolvency Resolution Process (CIRP) period.
3. Allegations of mismanagement against the Resolution Professional (RP) by Financial Creditors.
4. Appointment of a Liquidator for the Corporate Debtor.
5. Condonation of delay in filing the application for liquidation.
6. Direction to release pending CIRP costs to the RP.
7. Allegations of lapses in the conduct of CIRP against the RP.

Analysis:
1. The judgment pertains to a case where the Adjudicating Authority ordered for the liquidation of the Corporate Debtor under Section 33(1) of the Insolvency and Bankruptcy Code, 2016, as no Resolution Applicant approached within the prescribed period, leading to the end of the CIRP period.

2. The CIRP period was extended following an application for exclusion of days, but with no viable resolution plan, the Authority had to order liquidation due to the lack of constructive proposals.

3. The Financial Creditors raised serious allegations of mismanagement against the RP, leading to a lack of cooperation between the CoC members and the RP. This resulted in a decision to not appoint the RP as the Liquidator.

4. A new Liquidator was appointed for the Corporate Debtor, with specific directions to act in accordance with the IBC, investigate financial affairs, and comply with regulatory requirements during the liquidation process.

5. A delay in filing the application for liquidation was condoned, and directions were given regarding the release of pending CIRP costs to the RP.

6. Allegations of lapses in the conduct of CIRP led to the decision to forward the matter to the Insolvency and Bankruptcy Board of India for verification.

7. The judgment highlighted the need for cooperation among stakeholders and emphasized the importance of following due process in the liquidation proceedings to protect the interests of all parties involved.

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