Company Liquidation Application Approved by Tribunal The National Company Law Tribunal, Ahmedabad, allowed the Committee of Creditors' application for liquidation under section 33 of the Insolvency and ...
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Company Liquidation Application Approved by Tribunal
The National Company Law Tribunal, Ahmedabad, allowed the Committee of Creditors' application for liquidation under section 33 of the Insolvency and Bankruptcy Code. The Tribunal upheld the COC's decision for liquidation, respecting their commercial wisdom. The order included directives for the cessation of the moratorium, appointment of a Liquidator, transfer of management powers, and cooperation of Corporate Debtor's personnel. Legal proceedings against the debtor were restricted, except those initiated by the Liquidator. The Tribunal emphasized the COC's authority in maximizing asset value and approved the liquidation, appointing a specific individual as the Liquidator.
Issues: Liquidation application under section 33 of the IB Code; Replacement of IRP with RP; Jurisdiction of Adjudicating Authority over COC's commercial wisdom.
The judgment by the National Company Law Tribunal, Ahmedabad, adjudicated on an application filed under section 33 of the Insolvency and Bankruptcy Code. The Tribunal noted an order passed for the replacement of the Interim Resolution Professional (IRP) with the Resolution Professional (RP) by the Division Bench. The application was filed by the Committee of Creditors (COC) seeking liquidation, which was supported by a 100% voting share in favor of liquidation. However, the order for the replacement of the IRP was passed after the application for liquidation, when the IRP/RP had already become functus officio. The Tribunal emphasized that the COC's decision for liquidation, as observed in a Supreme Court judgment, is beyond the Adjudicating Authority's jurisdiction to interfere, respecting the COC's commercial wisdom in maximizing the asset value of the Corporate Debtor.
The Tribunal allowed the application filed by the COC, granting several directives upon the liquidation order. The moratorium under Section 14 of the IB Code was to cease from the date of the liquidation order, with the Liquidator instructed to issue a public announcement and send a certified copy of the order to the relevant authority. Legal proceedings against the Corporate Debtor were prohibited, except those initiated by the Liquidator with prior approval. The order clarified exceptions for legal proceedings concerning specific transactions notified by the Central Government. Furthermore, the Liquidator was empowered with the duties and responsibilities enumerated in the IB Code and related regulations.
The Tribunal's order included provisions for the cessation of powers of the Corporate Debtor's management, transferring them to the Company Liquidator. The Liquidator was authorized to charge fees proportionate to the liquidation estate assets' value. Additionally, the Corporate Debtor's personnel were directed to cooperate with the Liquidator. The Registry was tasked with communicating the order promptly to relevant entities for compliance. Ultimately, the Tribunal approved the liquidation of the Corporate Debtor under Section 33 of the IB Code and appointed a specific individual as the Liquidator, concluding the instant application.
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