2021 (9) TMI 793 - Tri - Insolvency and Bankruptcy

Seeking approval of the period of exclusion - Section 47A of the Insolvency and Bankruptcy Code, 2016 - period between 23rd March 2020 and 31st August 2020 and 10.05.2021 to 21.06.2021 - seeking to Approve an extension of 1 Year from 23rd November 2021 to continue the liquidation period - Regulations 44(2) of the Insolvency and bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT - It is seen that the Liquidator is yet to complete the Liquidation process in relation to the Corporate Debtor and all the e-auctions conducted by the Liquidator have failed. Further, due to the prevailing Covid - 19 pandemic and subsequent lock-down imposed by the Government of India and the State Governments, the Liquidator was unable to complete the Liquidation process of the Corporate Debtor within the time limit prescribed under the Code and in terms of Regulation 44 of the IBBI (Liquidation Process) Regulations, 2016. Regulation 44(2) of IBBI (Liquidation Process) Regulations, 2016, which was amended upto 15.12.2016, is taken into consideration for the facts of the present case and it contemplates that if the liquidator has failed to liquidate the Corporate Debtor within two years then he has to make an application to the Adjudicating Authority to continue such liquidation, along with a report explaining why the liquidation has not been completed specifying the additional time that shall be required for completion of the liquidation. This Authority feels that it is just and proper to extend the Liquidation period for a further period of one year and as such the Liquidation period of the Corporate Debtor is extended for a period of one year from the date of this Order and the Liquidation process in relation to the Corporate Debtor is required to be completed on or before 02.08.2022 - Application allowed.

Summary

Issues:
1. Extension of the liquidation period under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.
2. Failure of e-auctions due to lack of participation and impact of Covid-19 pandemic on the liquidation process.
3. Application for extension of the liquidation process and compliance with regulations.

Issue 1: Extension of the liquidation period under Section 60(5) of the Insolvency and Bankruptcy Code, 2016.

The Liquidator filed an application seeking approval for the exclusion period under Section 47A of the Code and an extension of one year from a specified date to continue the liquidation process. The Tribunal noted that the Liquidator was appointed following an order for liquidation of the Corporate Debtor. Despite efforts such as public announcements, asset memorandums, and e-auctions, no successful bids were received due to lack of participation, worsened by the Covid-19 pandemic and lockdowns. The Liquidator requested an extension due to pending matters and inability to complete the process within the stipulated time frame.

Issue 2: Failure of e-auctions due to lack of participation and impact of Covid-19 pandemic on the liquidation process.

Multiple e-auctions conducted by the Liquidator failed to attract any buyers, with no participation in several rounds. The Covid-19 pandemic and associated lockdowns further hindered the process by preventing potential buyers from participating. Despite some initial interest from prospective buyers, no successful transactions materialized. The Liquidator also faced challenges regarding income from a property detained by the Corporate Debtor's promoters, adding to the complexity of the situation.

Issue 3: Application for extension of the liquidation process and compliance with regulations.

Regulation 44(2) of the IBBI (Liquidation Process) Regulations, 2016, allows for an extension of the liquidation period if the Liquidator fails to complete the process within two years. The Liquidator, unable to meet the deadline due to various reasons including the pandemic, sought an extension for one year. The Tribunal, considering the circumstances and regulatory provisions, granted the extension, emphasizing the need for the Liquidator to diligently adhere to the prescribed timelines and complete the process by the extended deadline without further extensions.

In conclusion, the Tribunal approved the extension of the liquidation period, taking into account the challenges faced by the Liquidator, particularly the lack of successful e-auctions and the impact of the Covid-19 pandemic. The decision was made in accordance with the relevant sections of the Insolvency and Bankruptcy Code and the IBBI (Liquidation Process) Regulations, emphasizing the importance of timely completion and regulatory compliance in the liquidation process.