Appellant challenged the auction sale of shares by the ...

Liquidator's auction sale of Corporate Debtor's shares at fair value upheld despite pending challenge to rights issue.

Case Laws     Insolvency and Bankruptcy

September 2, 2024

Appellant challenged the auction sale of shares by the Liquidator, claiming undervaluation and lack of proper valuation, as shares were sold only at book value despite higher actual value. The Tribunal held that the pending challenge to the rights issue by Alliance Broadband cannot impact the auction sale of shares on an 'as is where is basis'. The Liquidator's lack of physical possession of shares did not render the auction illegal, as shares became part of the liquidation estate by operation of law. Alliance Broadband was directed to handover original share certificates to the Liquidator, which were subsequently handed over to the successful auction purchaser. The Liquidator indicated in the sale notice about non-possession of physical shares and steps being taken to acquire them. As a shareholder of Alliance Broadband, the Corporate Debtor's shares were rightly auctioned by the Liquidator after liquidation order. The 77,500 shares were not undervalued, valued by an IBBI Registered Valuer, and sold above book value. The pending challenge to the rights issue does not impact the lawful auction sale. The Appellate Tribunal dismissed the appeals, finding no error in the Adjudicating Authority's order rejecting the appellant's application.

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