2021 (12) TMI 1016 - Tri - Insolvency and Bankruptcy

Seeking dissolution of the Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'Code') read with Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT - It is seen from the record that no assets are left with the Corporate Debtor and no other business operation is being carried. Hence, it is of no use to keep alive the Corporate Debtor as legal entity in existence. For the purpose of pronouncement of Dissolution of the Corporate Debtor it is necessary to peruse Section 54 of the Code along with Regulation 14 of the Regulations. The present Application is allowed as the dissolution is the last step to wind up the proceedings of the Corporate Debtor as per the provisions of law - decided in favor of applicant.

Summary

Issues:
Application for dissolution of Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

Analysis:

1. The case involved an Application filed by the Liquidator of a Corporate Debtor seeking the dissolution of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016, along with Regulation 14 of the Liquidation Regulations. The Corporate Insolvency Resolution Process (CIRP) proceedings were initiated earlier, leading to the decision for liquidation of the Corporate Debtor.

2. Following the initiation of liquidation proceedings, the Liquidator complied with the regulations by making a public announcement of liquidation, inviting stakeholders to submit or update their claims. The Liquidator also formed a stakeholder consultation committee as per the requirements.

3. The Liquidator submitted a preliminary report containing details such as the capital structure of the Corporate Debtor, estimates of assets and liabilities, proposed plan of action for liquidation, and the formation of a stakeholder consultation committee. Additionally, an asset memorandum was filed with information on asset values, intended sale methods, and expected realization amounts.

4. Subsequently, progress reports were submitted as required by the regulations, culminating in the final report for the dissolution of the Corporate Debtor. The Liquidator informed the Committee of Creditors (CoC) about the estimated liquidation cost and the absence of significant assets for sale.

5. The decision for dissolution was based on the provisions of Section 54 of the Code and Regulation 14, allowing for early dissolution if the realizable properties are insufficient to cover liquidation costs and further investigation is unnecessary. The Tribunal granted the Application for dissolution, declaring the Corporate Debtor dissolved with immediate effect.

6. The Order directed the Liquidator to inform all relevant authorities about the dissolution, discharge the Liquidator from duties, and update the status of the Corporate Debtor in official records. The Tribunal emphasized that the dissolution was justified due to the lack of realizable assets and the completion of the liquidation process.

7. The Tribunal's decision to dissolve the Corporate Debtor was deemed necessary to conclude the insolvency proceedings in compliance with the legal framework, as outlined in the Code and the applicable regulations. The Order provided clear directions for the necessary actions to be taken post-dissolution, ensuring compliance with statutory requirements.