2024 (8) TMI 668 - Tri - Insolvency and Bankruptcy

Dissolution of Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016 r.w Regulation 45 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT - On perusal of the application and documents annexed with it, it is found that the applicant has not annexed Final report and Sale certificate with the application therefore this Adjudicating Authority listed this matter for clarification on 04.06.2024. In compliance of order dated 04.06.2024, applicant filed clarification affidavit. It is observed that the liquidator has obtained a report from the Auditor by way of Independent Auditor s Report wherein the draw down of receipts and payments are mentioned. By way of email he has forwarded to a list of recipients for information and has in its report stated that the same has been forwarded for information. However, neither the email states that in view of the report he proposes to dissolve the entity and file before this authority this application, nor has he convened a meeting of the SCC to propose a dissolution under Sec 54 of IBC 2016. This application cannot be considered and needs to be reverted back with the directions to the liquidator to convene a meeting of SCC and place his proposal and submit a fresh application based on the advice of SCC - Application rejected.

Issues:
1. Application for dissolution of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with IBBI (Liquidation Process) Regulations, 2016.
3. Sale of immovable property through e-auction.
4. Submission of Final Report and Compliance Certificate.
5. Distribution of funds to creditors.
6. Communication with Income Tax Department.
7. Convening of Stakeholder Consultation Committee meeting.
8. Clarification on missing documents.
9. Convening a meeting of SCC for dissolution proposal.

1. Application for dissolution of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016:
The liquidator filed an application seeking the dissolution of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016, citing the inability to receive any resolution plan. The application was supported by the liquidator's actions in compliance with the relevant regulations.

2. Compliance with IBBI (Liquidation Process) Regulations, 2016:
The liquidator fulfilled the requirements of the IBBI (Liquidation Process) Regulations, 2016 by making a public announcement for creditors to submit claims, forming a Stakeholder Consultation Committee, and submitting necessary reports and documents as per the regulations.

3. Sale of immovable property through e-auction:
The immovable property of the Corporate Debtor was successfully sold through an e-auction process after multiple attempts. The sale was finalized with a successful bidder for a specified amount, and the sale deed was executed between the liquidator and the buyer.

4. Submission of Final Report and Compliance Certificate:
The liquidator submitted the Final Report, prepared and audited by a professional firm, along with a Compliance Certificate as required by the regulations. These documents were shared with the Stakeholder Consultation Committee members and submitted to the relevant authorities.

5. Distribution of funds to creditors:
Due to insufficient funds, the liquidator distributed available funds, excluding liquidation expenses, to the secured creditor. The liquidator ensured transparency by providing details of the distribution and confirming the absence of pending litigations against the Corporate Debtor.

6. Communication with Income Tax Department:
The liquidator informed the Income Tax Department about the dissolution of the Corporate Debtor, and the department filed a claim with no pending liabilities, indicating compliance with tax obligations.

7. Convening of Stakeholder Consultation Committee meeting:
The liquidator conducted several meetings with the Stakeholder Consultation Committee to discuss the status of the Corporate Debtor, fund distribution, and other relevant matters, ensuring active engagement and transparency in the liquidation process.

8. Clarification on missing documents:
The Adjudicating Authority requested clarification on missing documents, specifically the Final Report and Sale Certificate, which were subsequently filed by the applicant to address the deficiency.

9. Convening a meeting of SCC for dissolution proposal:
The application for dissolution was rejected as the liquidator failed to convene a meeting of the Stakeholder Consultation Committee to propose dissolution under Section 54 of the IBC 2016. The Authority directed the liquidator to convene a meeting, seek advice from the SCC, and submit a fresh application based on the committee's recommendations.

In conclusion, while the liquidator demonstrated compliance with various regulatory requirements and successfully managed the liquidation process, the failure to convene a meeting of the Stakeholder Consultation Committee for the dissolution proposal led to the rejection of the application for dissolution of the Corporate Debtor.

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