2018 (8) TMI 2051 - Tri - Insolvency and Bankruptcy

Corporate Debtor Liquidation Order Issued under Insolvency Code Section 33

The Adjudicating Authority ordered the liquidation of the Corporate Debtor, M/s. GB Engineering Enterprises Private Limited, under Section 33 of the ... Liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 - no resolution plan received within the CIRP period - initiation of liquidation in accordance with Chapter III of Part II of the I&B Code, 2016 - appointment of Company Liquidator - cessation of moratorium on liquidation - vesting of powers of board and management in the Liquidator - Liquidator's duty to make public announcement - liquidator entitled to fees from liquidation estateLiquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016 - no resolution plan received within the CIRP period - Order for liquidation of the Corporate Debtor was warranted as no resolution plan had been received or approved by the expiry of the CIRP period. - HELD THAT: - The Adjudicating Authority noted that the Corporate Debtor's CIRP was admitted and the maximum CIRP period expired without any resolution plan being approved by the Committee of Creditors. The minutes of the CoC meeting recorded a unanimous resolution that there was no scope for any resolution plan and recommended liquidation. In view of the absence of any approved resolution plan by the expiry of the CIRP timeline, the matter fell within the scope of Section 33(1)(a) of the Code and the Authority proceeded to order liquidation. [Paras 6, 7]Liquidation of the Corporate Debtor ordered under Section 33(1)(a) of the I&B Code, 2016.Appointment of Company Liquidator - Liquidator's duty to make public announcement - liquidator entitled to fees from liquidation estate - Appointment of the Resolution Professional as Company Liquidator and related duties and remuneration were sanctioned. - HELD THAT: - Having ordered liquidation, the Authority appointed the then Resolution Professional as Company Liquidator and directed that she shall issue the statutory public announcement that the Corporate Debtor is in liquidation. The Authority further recorded that the Liquidator shall be entitled to charge fees in proportion to the value of the liquidation estate as may be specified by the Board, and such fees shall be paid from the proceeds of the liquidation estate. [Paras 7]Ms. CS Satyadevi Alamuri appointed as Company Liquidator with power to make public announcement and to be paid fees from the liquidation estate.Cessation of moratorium on liquidation - vesting of powers of board and management in the Liquidator - Consequences of liquidation on moratorium, institution of suits, and vesting of managerial powers were specified. - HELD THAT: - The Authority declared that the moratorium under Section 14 shall cease from the date of liquidation order. It further directed that no suit or other proceedings shall be instituted by or against the Corporate Debtor except as provided under Section 52, but the Liquidator may institute proceedings on behalf of the Corporate Debtor with prior approval of the Authority. All powers of the board, key managerial personnel and partners cease and vest in the Liquidator, who shall exercise the statutory powers and duties under the Code and relevant regulations. [Paras 7]Moratorium ceased on liquidation; suits restricted as provided and the managerial powers vested in the Company Liquidator.Final Conclusion: The Adjudicating Authority, on finding that no resolution plan had been received or approved within the CIRP period, ordered liquidation of M/s. GB Engineering Enterprises Private Limited, appointed the Resolution Professional as Company Liquidator, and specified the statutory consequences and powers attendant upon liquidation. Issues:Liquidation of Corporate Debtor under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016.Analysis:The case involved a Miscellaneous Application filed by the Resolution Professional seeking an order for the liquidation of the Corporate Debtor under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016. The application was based on the fact that no Resolution Plan had been received by the Adjudicating Authority within the stipulated time frame. The Corporate Debtor, M/s. GB Engineering Enterprises Private Limited, had initiated Corporate Insolvency Resolution Process (CIRP) under Section 10 of the I&B Code, 2016, which led to the appointment of an Interim Resolution Professional. Subsequently, the Resolution Professional was appointed by the Adjudicating Authority. Despite efforts to elicit interest through an 'Expression of Interest' process, no Resolution Plan was submitted by any applicant, leading to the decision for liquidation.The Resolution Professional highlighted that the Corporate Debtor had minimal operations with high fixed overhead expenses that could not be sustained by the revenue generated. The operations were running at less than 1% of production capacity, with most existing orders completed. Additionally, a lack of cooperation from workers and management, along with mounting liabilities, further contributed to the decision for liquidation. The Committee of Creditors (CoCs) unanimously agreed that there was no viable Resolution Plan and passed a resolution to file for liquidation, appointing the Resolution Professional as the Liquidator.The Adjudicating Authority, after reviewing the facts presented in the application, proceeded to order the liquidation of the Corporate Debtor in accordance with Section 33 of the I&B Code, 2016. The order outlined the appointment of the Company Liquidator, cessation of the moratorium, transfer of powers to the Liquidator, and the conduct of liquidation proceedings as per the regulations. It also specified the duties and responsibilities of the Liquidator, including the right to charge fees for managing the liquidation estate. The order directed the Registry to notify relevant entities about the liquidation process and compliance requirements.In conclusion, the Miscellaneous Application filed by the Resolution Professional for the initiation of liquidation proceedings against the Corporate Debtor was disposed of, and the order for liquidation was pronounced in open court, detailing the necessary steps to be taken in the liquidation process.