2019 (12) TMI 1524 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor Approved, Liquidator Appointed

The Adjudicating Authority approved the liquidation of the Corporate Debtor based on the Committee of Creditors' resolution and the Resolution ... Seeking order for liquidation of Corporate Debtor - section 33(2) of I & B code, 2016 - HELD THAT:- In the instant case, the contention of the Suspended Director cannot be taken into consideration in view of the aforesaid amended provisions of Section 33(2) of IB Code, 2019. Thus, in view of the facts and circumstances recorded by RP, this Adjudicating Authority did not receive any Resolution Plan under Sub-Section (6) of Section 30 and the CoC resolved to liquidate the Corporate Debtor with required majority. Therefore, in exercise of powers conferred under Sub-Clauses (i), (ii) and (iii) of Clause (b) of Sub-Section (1) of Section 33 of the I&B Code, 2016, the liquidation order is passed. Application allowed. Issues:Liquidation order sought by Resolution Professional under section 33(2) of I & B code, 2016.Analysis:The Resolution Professional (RP) filed an application seeking a liquidation order for the Corporate Debtor under section 33(2) of the Insolvency and Bankruptcy Code, 2016. The Corporate Debtor was admitted for commencement of Corporate Insolvency Resolution Process (CIRP) and Mr. Subba Rao Gonuguntla was appointed as the Insolvency Resolution Professional (IRP) by the Adjudicating Authority. Subsequently, Mr. Subba Rao Gonuguntla was appointed as the Resolution Professional (RP) during the first Committee of Creditors (CoC) meeting. The RP informed the CoC that the Corporate Debtor had no assets, no physical assets, no business activity, and was a Micro, Small and Medium Enterprises (MSME) unit. The RP suggested waiving the valuation and Form G issuance based on judicial pronouncements. The CoC resolved to waive the valuation and Form G issuance temporarily, allowing the Corporate Debtor to file a resolution plan to continue as a going concern. The CoC provided an opportunity for the Ex-management to submit compromise proposals or resolution plans, receiving six proposals until August 11, 2019. However, as the Suspended Director failed to fulfill commitments, the CoC decided on liquidation.The Suspended Director opposed the liquidation decision, claiming to be a first-generation entrepreneur with plans to establish a clinical research company. The Respondent argued that the CoC's decision to proceed with liquidation without following due process, including issuing Form G, was illegal and deprived the Erstwhile Directors of their rights to submit a resolution plan. The Respondent contended that the Petition filed by the RP without issuing Form G was illegal and should be dismissed. After hearing both sides and examining the records, the Adjudicating Authority noted that no resolution plan was received under Section 30(6). The Authority referred to the amended Section 33(2) of the IBC, 2019, allowing liquidation upon CoC's decision approved by the required majority. Therefore, the Adjudicating Authority ordered the liquidation of the Corporate Debtor, appointed a Liquidator, and outlined the process to be followed under the I&B Code.In conclusion, the Adjudicating Authority approved the liquidation of the Corporate Debtor based on the CoC's resolution and the RP's application, in accordance with the relevant provisions of the Insolvency and Bankruptcy Code, 2016. The Liquidator was appointed to oversee the liquidation process, with specific instructions regarding the management of assets, legal proceedings, and fees. The order was issued to cease the moratorium, transfer powers to the Liquidator, and ensure compliance with regulations governing the liquidation process. The decision was communicated to relevant stakeholders, and the RP's application for liquidation proceedings against the Corporate Debtor was disposed of.