2022 (9) TMI 747 - Tri - Insolvency and Bankruptcy

Seeking liquidation of the Corporate Debtor - Section 33 of IBC - HELD THAT - Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor where the Resolution Professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors approved by not less than sixty-six percent of voting share to liquidate the corporate debtor. The Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code - Application allowed.

Issues involved:
Liquidation of Corporate Debtor sought by Resolution Professional with Committee of Creditors' approval.

Detailed Analysis:

1. Background of the Case: The Resolution Professional filed an application seeking liquidation of the Corporate Debtor, Mohan Motor Dealers Private Limited, based on the Committee of Creditors' decision to liquidate the company by 100% votes.

2. Appointment of Resolution Professional: The Corporate Insolvency Resolution Process was initiated against the Corporate Debtor, and the Resolution Professional was appointed to manage the process.

3. Non-cooperation of Suspended Directors: The suspended directors of the Corporate Debtor failed to cooperate with the Resolution Professional by not providing necessary information and documents, leading to legal actions and directions from the Adjudicating Authority.

4. Forensic Audit Findings: A Forensic Auditor's report revealed preferential, undervalued, and fraudulent transactions by the Corporate Debtor before the commencement of the Corporate Insolvency Resolution Process.

5. Decision for Liquidation: The Committee of Creditors, by a significant majority vote, decided to go for liquidation due to the absence of assets in the company and the identified irregular transactions.

6. Application for Liquidation: The Resolution Professional filed an application under relevant sections of the Insolvency and Bankruptcy Code for liquidation after the expiry of the Corporate Insolvency Resolution Process period.

7. Appointment of Liquidator: The Tribunal ordered the liquidation of the Corporate Debtor and appointed a specific Insolvency Professional as the Liquidator to manage the liquidation process as per the regulations.

8. Operational Changes: With the initiation of the liquidation process, the powers of the Board of Directors and key managerial persons ceased to exist, transferring to the appointed Liquidator.

9. Legal Proceedings: Restrictions were imposed on legal proceedings against the Corporate Debtor during the liquidation process, with the Liquidator having the liberty to initiate legal actions on behalf of the company with prior approval.

10. Discharge of Officers and Employees: The liquidation order served as a notice of discharge to the officers, employees, and workmen of the Corporate Debtor, except for those involved in continuing the business during liquidation.

11. Compliance and Reporting: The Liquidator was directed to file a copy of the liquidation order with the Registrar of Companies and ensure compliance with legal formalities. The Registry was also tasked with informing all relevant parties about the order.

12. Future Reporting: A date was set for reporting progress on the case, indicating ongoing monitoring and oversight by the Tribunal.

This comprehensive analysis covers the key aspects and developments in the legal judgment regarding the liquidation of the Corporate Debtor as per the Insolvency and Bankruptcy Code.

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