Tribunal Appoints RP as Liquidator in Corporate Debtor's Liquidation Case

The Tribunal allowed the application for liquidation of the Corporate Debtor, appointing the Resolution Professional (RP) as the Liquidator. The Committee of Creditors (COC) unanimously decided on liquidation due to the absence of viable plans, with the RP consenting to act as Liquidator. The Tribunal emphasized its lack of jurisdiction to interfere in the COC's commercial wisdom, citing relevant precedents. Various orders were issued, including the cessation of moratorium, public announcement of liquidation, prohibition of legal proceedings without approval, and empowerment of the Liquidator with specified duties. The application was disposed of with the outlined orders and observations.

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Issues:
Liquidation order under Section 33(1) and 33(2) of the IB Code.

Analysis:
The Tribunal heard the application filed under Section 33(1), 33(2), and 34(1) of the Insolvency and Bankruptcy Code. The Suspended Management, represented by a Financial Creditor's Agent (FCA), expressed no objection to the passing of orders under Section 33(1) and 33(2). The Committee of Creditors (COC), consisting of sole financial creditors, unanimously passed a resolution for the liquidation of the Corporate Debtor in a meeting. The Resolution Professional (RP) diligently invited Resolution Plans but received none viable. The COC decided on liquidation due to the absence of viable plans, and the RP consented to act as the Liquidator. The Tribunal emphasized that it lacks jurisdiction to interfere in the commercial wisdom of the COC, citing precedents like K. Sasidhar's case and a judgment by the Supreme Court. The Supreme Court affirmed that the Adjudicating Authority cannot reverse the commercial wisdom of the COC, which decides on maximizing asset value and creditor payments.

The Tribunal issued several orders following the analysis. Firstly, the moratorium under Section 14 of the IB Code ceased upon the liquidation order. The Liquidator was directed to issue a public announcement regarding the liquidation, attempt to dispose of the Corporate Debtor as a going concern, and inform the relevant authority. Legal proceedings by or against the Corporate Debtor were prohibited, except those initiated by the Liquidator with prior approval. The order excluded certain legal proceedings specified by the Central Government. The order served as a discharge notice to officers, employees, and workmen, except during continued business by the Liquidator. The Liquidator assumed all powers of the Corporate Debtor's management, with specific duties outlined in the IB Code and related regulations. The Corporate Debtor's personnel were mandated to assist the Liquidator, who could charge a fee for liquidation proceedings. The Registry was instructed to communicate the order promptly to relevant entities for compliance.

Consequently, the Tribunal allowed the application for liquidation of the Corporate Debtor, appointing the RP as the Liquidator. The instant application was disposed of with the specified orders and observations.

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