Company liquidation ordered by NCLT, New Delhi: COC rejects plans, appoints Liquidator

The National Company Law Tribunal, New Delhi, Principal Bench, ordered the liquidation of the company following the rejection of conditional plans by the Committee of Creditors (COC) in a liquidation application under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. The COC's decision was deemed commercially sound to maximize the Corporate Debtor's asset value. Mr. Gyan Chand Narang was appointed as the Liquidator, with instructions to manage the liquidation process according to the law and regulations, investigate financial affairs, and submit a Preliminary Report within seventy-five days.

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Issues: Liquidation application under Section 33(2) of the Insolvency and Bankruptcy Code, 2016

In the judgment delivered by the National Company Law Tribunal, New Delhi, Principal Bench, the case involved a liquidation application filed under Section 33(2) of the Insolvency and Bankruptcy Code, 2016. The application sought the liquidation of the company based on a resolution passed by the Committee of Creditors (COC) with 87.30% majority. The case was initially admitted on 20.09.2018, appointing an Interim Resolution Professional. After receiving claims from creditors totaling Rs. 444.60 crores, the Interim Resolution Professional continued as the Resolution Professional. Valuers were appointed to determine the liquidation value, which was assessed at Rs. 119.36 crores. Fourteen expressions of interest were received, but two plans were rejected by the COC for being conditional and not reflecting the value of the Corporate Debtor. Consequently, the COC passed a resolution on 22.10.2019 for the liquidation of the company with 87.30% voting, recommending the same Resolution Professional as the Liquidator.

The Tribunal acknowledged the commercial wisdom of the COC in rejecting the conditional plans to maximize the value of the assets of the Corporate Debtor. Consequently, the Tribunal ordered the liquidation of the company and appointed Mr. Gyan Chand Narang as the Liquidator. Directions were given for the issuance of a Public Announcement, communication of the Order to relevant authorities, commencement of a fresh Moratorium, and adherence to the liquidation process as per the Code and regulations. The Liquidator was instructed to ensure the corporate debtor remains a going concern, investigate financial affairs, handle pending applications, and submit a Preliminary Report within seventy-five days. The Order was to be communicated to financial creditors, the corporate debtor, and the Liquidator for further action, thus concluding the matter.

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