Adjudicator approves liquidation of non-operational Corporate Debtor

The Adjudicating Authority upheld the Committee of Creditors' (CoC) decision to recommend liquidation of the non-operational Corporate Debtor due to the absence of viable Resolution Plans. It emphasized the CoC's commercial wisdom in maximizing asset value and payment distribution, refraining from interference. The appointment of a Liquidator was directed, with instructions for legal proceedings and compliance with the Insolvency and Bankruptcy Code. The Company Liquidator was authorized to charge fees based on the liquidation estate assets, concluding the matter in accordance with the IB Code.

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Issues involved:
Liquidation of Corporate Debtor under section 33(1) (a) of the Insolvency and Bankruptcy Code, 2016; Appointment of Liquidator; Commercial wisdom of Committee of Creditors (CoC) in recommending liquidation; Jurisdiction of Adjudicating Authority to interfere in CoC's commercial wisdom.

Detailed Analysis:

1. Liquidation of Corporate Debtor under IB Code:
The Resolution Professional (RP) filed IA No. 544 of 2019 in Company Petition (IB) No. 537 of 2018 seeking liquidation of the Corporate Debtor under section 33(1) (a) of the Insolvency and Bankruptcy Code, 2016 (IB Code) and the appointment of a Liquidator. The CoC decided for the continuation of the Interim Resolution Professional (IRP) as RP after no viable Resolution Plans were received within the stipulated time frame.

2. Commercial Wisdom of CoC in Recommending Liquidation:
The RP made efforts to invite Resolution Plans as per the IB Code but no feasible plans were received. The CoC, in its 7th meeting, recommended liquidation as the Corporate Debtor was non-operational, and no prospective Resolution Plan was expected. The Adjudicating Authority noted that it cannot interfere in the commercial wisdom of the CoC as established in previous judgments and upheld by the Supreme Court regarding the discretion of the CoC in maximizing asset value and payment distribution.

3. Appointment of Liquidator and Legal Proceedings:
The order for liquidation led to the cessation of the moratorium declared under Section 14 of the IB Code. The Liquidator was directed to issue a public announcement, send a certified copy of the order to the relevant authority, and manage legal proceedings on behalf of the Corporate Debtor with prior approval. Certain legal proceedings exempted from this provision were specified. The Liquidator was granted powers as per the IB Code and regulations, and the personnel of the Corporate Debtor were instructed to cooperate with the Liquidator.

4. Final Orders and Compliance:
The Company Liquidator was authorized to charge fees based on the value of the liquidation estate assets. The Registry was directed to communicate the order to the concerned authorities for compliance. The IA for liquidation was allowed, and the Liquidator was appointed for the purpose of liquidation. The IA was disposed of with the stated observations, concluding the matter in accordance with the provisions of the IB Code.

This detailed analysis covers the key issues involved in the judgment, focusing on the legal aspects and procedural steps taken in the liquidation process of the Corporate Debtor under the Insolvency and Bankruptcy Code, 2016.

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