2021 (8) TMI 847 - Tri - Insolvency and Bankruptcy

Early Dissolution of the Corporate Debtor - section 54 of the Insolvency and Bankruptcy code read alongwith Regulation 14 of IBBI (Liquidation Process) Regulations 2016 - HELD THAT - No claims have been received from any Operational Creditor including the Operational Creditor at whose behest CIRP had commenced in this matter. The RP mentions that he has received only one claim from Financial Creditor, i.e., M/s. Loyal Enterprises and total admitted amount is ₹ 20 lakhs. Further, the firm does not have any workmen and employees. The bench notes that there is no asset in the Company and as per the audited financials as on 31.03.2019 the balance sheet the Company has fixed assets of about ₹ 13.79 lakhs which is not there in the Company physically, therefore, can not be valued. Similarly, there is Stock in Trade as per the books of account of about ₹ 27.93 lakhs which were primarily perishable food items and cannot be valued at present. There is no asset in the Company and the lone CoC member has recommended direct dissolution of the Company as no purpose would be served by first going in for liquidation (since no assts are there in the Company and no claim has been filed). The lone Financial Creditor is reconciled to the fact that he will not get anything by liquidation, therefore, has recommended in the CoC meeting dated 06.10.2020, for a direct dissolution. The Corporate Debtor Company stands dissolved from the date of this Order - Application allowed.

Summary

Issues: Application for Dissolution of Corporate Debtor under Section 54 of Insolvency Code with Regulation 14 - Early Dissolution.

Detailed Analysis:
1. The liquidator filed an application seeking dissolution of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, along with Regulation 14 for Early Dissolution.

2. Initially, an order was passed admitting the petition under Section 9 of the Code, appointing an Interim Resolution Professional, and imposing a moratorium during the Corporate Insolvency Resolution Process (CIRP).

3. Public announcements were made for stakeholders to submit claims, with a claim received from a Financial Creditor and the last available audited balance sheet indicating the assets of the Corporate Debtor.

4. The Committee of Creditors (CoC) meetings were held, and due to Covid-19 restrictions, a meeting via video conferencing was conducted to discuss the dissolution of the Corporate Debtor.

5. The applicant highlighted the uncooperative behavior of the Directors, lack of known assets, perishable stock, non-operational status, and absence of Promoters, making it impossible to prepare an Information Memorandum for resolution.

6. The CoC passed a resolution for the dissolution of the Corporate Debtor due to the absence of business activity, assets, and untraceable Promoters, authorizing necessary steps for dissolution.

7. The application for dissolution was made under Section 54 of the Code, which requires complete liquidation of assets before dissolution, and Regulation 14 allows for early dissolution if realizable properties are insufficient for liquidation costs.

8. The judgment referenced Section 59(7) of the IBC for voluntary liquidation and highlighted the absence of enforceability of certain provisions under the Companies Act 2013.

9. The bench noted the absence of assets, claims from Operational Creditors, and the recommendation for direct dissolution by the sole Financial Creditor in the CoC meeting.

10. Referring to a similar judgment from NCLT Chennai, the bench declared it just and equitable to proceed with the dissolution of the Company under Section 54 of the Code.

11. The application for dissolution was allowed, and the Corporate Debtor was dissolved, with directions for further necessary actions and consignment of the case file to records.