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Issues: (i) whether, in a liquidation sale of the corporate debtor as a going concern, the Adjudicating Authority could grant consequential reliefs and directions under section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016; (ii) whether the successful bidder was entitled to directions relating to continuation of the business, transfer and extinguishment of liabilities, allotment of shares, listing, board reconstitution, statutory approvals, and other incidental reliefs.
Issue (i): whether, in a liquidation sale of the corporate debtor as a going concern, the Adjudicating Authority could grant consequential reliefs and directions under section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016.
Analysis: Regulation 32 of the IBBI (Liquidation Process) Regulations, 2016 permits sale of the corporate debtor as a going concern. A sale as a going concern is intended to preserve the business and make the acquisition workable in practice. For that purpose, the successful bidder may require directions that facilitate implementation of the sale and compliance with the applicable corporate and regulatory framework. Section 60(5)(c) confers jurisdiction to entertain questions arising out of or in relation to liquidation proceedings and therefore enables the Tribunal to issue appropriate reliefs where they are necessary to give effect to the going-concern sale.
Conclusion: The Tribunal held that it had jurisdiction to grant consequential reliefs in aid of the going-concern sale.
Issue (ii): whether the successful bidder was entitled to directions relating to continuation of the business, transfer and extinguishment of liabilities, allotment of shares, listing, board reconstitution, statutory approvals, and other incidental reliefs.
Analysis: The Tribunal accepted that the purchaser of the corporate debtor as a going concern was entitled to the reliefs necessary to run the company and to comply with the Companies Act, 2013 and related regulatory requirements. It directed consideration of the bidder's proposed mode of payment, held that ownership and related benefits would follow upon completion of payment, recognised that pre-auction claims and liabilities would be dealt with in liquidation, and treated existing shareholders' interests as matters for distribution under section 53 of the Insolvency and Bankruptcy Code, 2016. It also held that the bidder could pursue the consequential statutory steps relating to share allotment, board constitution, listing, continuance of approvals, and SEZ benefits, while tax and stamp duty reliefs were left to be addressed with the competent authorities.
Conclusion: The Tribunal granted the reliefs sought in substance and disposed of the application accordingly.
Final Conclusion: The liquidation sale of the corporate debtor as a going concern was upheld with ancillary directions to facilitate continuation of the business and completion of the post-sale corporate and statutory formalities.
Ratio Decidendi: Where a corporate debtor is sold in liquidation as a going concern, the Adjudicating Authority may, under section 60(5)(c), grant consequential directions necessary to make the sale workable and to preserve the going-concern value of the business.
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