Court orders liquidation of Corporate Debtor for failure to approve Resolution Plan within 270 days

The court ordered the liquidation of the Corporate Debtor after the failure to approve a Resolution Plan within the mandated period of 270 days under the Insolvency & Bankruptcy Code, 2016. The Liquidator was appointed to oversee the liquidation process in accordance with the relevant legal provisions and regulations. Applications for reconsideration of the Resolution Plan were dismissed, and the decision to proceed with liquidation was finalized by the Committee of Creditors due to the expiration of the CIRP period.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Submission and consideration of the Resolution Plan
3. Rejection of the Resolution Plan
4. Expiry of the CIRP period
5. Application for reconsideration of the Resolution Plan
6. Decision to proceed with liquidation
7. Appointment of Liquidator and commencement of the liquidation process

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The CP(IB) No. 593/KB/2017 was filed by the State Bank of India, a financial creditor, to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, Coastal Projects Limited, as per Section 7 of the Insolvency & Bankruptcy Code, 2016. The application was admitted on 5th January 2018, and Mr. Ravi Sankar Devarakonda was appointed as the Interim Resolution Professional.

2. Submission and consideration of the Resolution Plan:
Following the public announcement and invitation for expressions of interest, only one Resolution Applicant, Mantena Engitec Private Limited (MEPL), submitted a Resolution Plan. This plan underwent various negotiations and deliberations with the Committee of Creditors (COC) and was revised and submitted on 7th September 2018. Despite these efforts, the plan was not approved by the COC, with 88.04% voting against it.

3. Rejection of the Resolution Plan:
The Resolution Plan was rejected primarily due to the applicant's request for a waiver of an unconditional and irrevocable performance bank guarantee. The COC voted against both the plan and the waiver request. The rejection was seen as not based on sound reasons, as it was communicated that the plan was rejected due to the waiver request.

4. Expiry of the CIRP period:
The mandatory period for completing the CIRP, including the extended period, expired on 1st October 2018. Despite ongoing negotiations, the Resolution Professional and the COC failed to finalize the Resolution Plan within the stipulated 270 days.

5. Application for reconsideration of the Resolution Plan:
The Resolution Applicant filed CA(IB) No. 965/KB/2018 for reconsideration of the Resolution Plan. However, this application, along with other applications filed by Operational Creditors, was not considered due to the expiry of the CIRP period. The request for reconsideration after the expiry of 270 days was not entertained.

6. Decision to proceed with liquidation:
Given the failure to obtain an approved Resolution Plan within the mandatory period, the COC decided to proceed with the liquidation of the Corporate Debtor. The Resolution Professional moved an application for liquidation, and the case was adjourned multiple times before the final hearing on 30th November 2018.

7. Appointment of Liquidator and commencement of the liquidation process:
The tribunal concluded that it could not extend the CIRP period beyond 270 days as mandated by Section 12 of the I&B Code, 2016. Consequently, the tribunal ordered the liquidation of the Corporate Debtor in accordance with Chapter III read with Section 33 of the I&B Code, 2016. Mr. Ravi Sankar Devarakonda was appointed as the Liquidator. The order included directives for the Liquidator to issue public announcements, communicate with relevant authorities, and proceed with the liquidation process as per the stipulated regulations. Applications CA(IB) No. 965/KB/2018 and CA(IB) No. 955/KB/2018 were dismissed, with the latter being allowed to submit claims to the Liquidator.

Conclusion:
The judgment highlights the procedural adherence to the Insolvency & Bankruptcy Code, 2016, emphasizing the strict timelines for the CIRP and the subsequent decision to liquidate the Corporate Debtor due to the failure to approve a Resolution Plan within the mandated period. The tribunal's order ensures that the liquidation process is carried out in compliance with the relevant legal provisions and regulations.

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