2019 (4) TMI 1730 - Tri - Insolvency and Bankruptcy

Tribunal orders liquidation of ABG Shipyard Limited under Insolvency Code

The Tribunal ordered the liquidation of ABG Shipyard Limited under Section 33(2) of the Insolvency and Bankruptcy Code, 2016, as the Corporate Debtor was ... Liquidation of Corporate Debtor - appointment of liquidator for Corporate Debtor - submission of written consent to act as the liquidator for the purposes of liquidation of the Corporate Debtor - continuation of the Applicant as the Resolution Professional of the Corporate Debtor - initiation of Corporate Insolvency Resolution Process - Section 7 of the Code read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authorities) Rules, 2016. HELD THAT:- We feel appropriate to confirm and approve the CoC's Resolution dated 20.02.2019 recommending for Liquidation of the Corporate Debtor Company and to pass an order for liquidation of the Corporate Debtor Compan The supremacy of CoC and their commercial wisdom cannot be questioned. It is also observed that National Company Law Tribunal has no jurisdiction and authority to analyze or evaluate the commercial decision of the CoC to enquire into the justness of the rejection of the Resolution Plan by the dissenting financial creditors. It is hereby ordered that the Corporate Debtor Company, viz., ABG Shipyard Limited, shall go into liquidation under Section 33(2) of the Code. The Resolution Professional Mr. Sundaresh Bhatt appointed for the Corporate Insolvency Resolution Process under Chapter II of the Code shall act as the Liquidator for the purpose of Liquidation in pursuant to Section 34(1) of the Insolvency and Bankruptcy Code, 2016 as approved by the CoC in their 22nd Meeting held on 01.03.2019 and his fees shall be as per the Schedule as contained in the IBC, 2016 - All the powers of the Board of Directors, Key Managerial Personnel and the Directors of the Corporate Debtor Company, as the case may be, shall cease to have effect and shall be vested in the Liquidator pursuant to Section 34(2) of the Insolvency and Bankruptcy Code, 2016 - That the personnel of the Corporate Debtor Company shall extend all assistance and co-operation to the Liquidator as may be required by him in managing the affairs of the Corporate Debtor Company. Application disposed off. Issues Involved:1. Application for liquidation of the Corporate Debtor.2. Payment of outstanding salaries and wages to employees and workmen.3. Preferential, undervalued, and fraudulent transactions.4. Appropriation of fixed deposits by the Bank of Baroda.5. Transactions classified as fraudulent/wrongful trading.Issue-wise Detailed Analysis:1. Application for Liquidation of the Corporate Debtor:The application for liquidation was filed under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 by the Resolution Professional (RP) for ABG Shipyard Limited. The Tribunal noted that the Corporate Debtor was not a going concern and the Committee of Creditors (CoC) had approved the liquidation with a voting share of 84.63%. The Tribunal referenced Section 33 of the Code, which mandates liquidation if no resolution plan is received or approved. The Tribunal confirmed the CoC's decision, emphasizing the commercial wisdom of the CoC, and ordered the liquidation of the Corporate Debtor, appointing the RP as the Liquidator.2. Payment of Outstanding Salaries and Wages to Employees and Workmen:The employees and workmen filed an application for payment of their outstanding dues. The Tribunal noted that the RP and CoC had received Rs. 9,55,82,571/- from the Coast Guard, out of which Rs. 2,75,00,000/- was apportioned for payment to workmen. The Tribunal directed the deposit of this amount with the NCLT Registry and disposed of the application.3. Preferential, Undervalued, and Fraudulent Transactions:The RP identified several transactions as preferential, undervalued, and fraudulent under Sections 43, 45, and 66 of the Code. These included transactions with ABS Resources Private Limited, Mahavir Distributor Private Limited, ABG International Private Limited, and Nor Crane & Winch Private Limited. The Tribunal found that certain transactions were preferential and undervalued, executed within the look-back period of two years before the commencement of insolvency proceedings. The Tribunal allowed the application, directing further investigation into these transactions.4. Appropriation of Fixed Deposits by the Bank of Baroda:The RP filed an application against the Bank of Baroda for appropriating Rs. 9,73,83,818/- in violation of the moratorium order. The Tribunal found that the bank was aware of the moratorium and directed it to reverse the appropriated amount and pay accrued interest. The application was allowed.5. Transactions Classified as Fraudulent/Wrongful Trading:The RP identified transactions with ABG Shipyard Singapore Pte. Limited as fraudulent under Section 66 of the Code. The Tribunal found that these transactions were not in the ordinary course of business and appeared to defraud creditors. The Tribunal allowed the application, directing further investigation into these transactions.Conclusion:The Tribunal ordered the liquidation of ABG Shipyard Limited, appointed the RP as the Liquidator, and directed the payment of outstanding dues to employees from specific funds. It also identified and directed further investigation into several preferential, undervalued, and fraudulent transactions, and ordered the reversal of wrongfully appropriated fixed deposits by the Bank of Baroda.