2019 (5) TMI 1910 - Tri - Insolvency and Bankruptcy

Corporate Debtor Faces Liquidation: Importance of Timely Resolution Plans in Insolvency

Ms. Srivani Merchants Private Limited, Versus M/s. RLA Holdings Private Limited,

Ms. Srivani Merchants Private Limited, Versus M/s. RLA Holdings Private Limited, - TMI Issues involved:- Application under section 7 of the Insolvency & Bankruptcy Code, 2016- Appointment of Interim Resolution Professional (IRP)- Dispute over the assets of the corporate debtor- Failure to receive any resolution plan within the stipulated time- Liquidation order under section 33 of the I&B CodeAnalysis:1. Application under section 7 of the Insolvency & Bankruptcy Code, 2016:The Financial Creditor filed an application against the Corporate Debtor for defaulting on a financial debt. The Corporate Debtor failed to pay Rs. 39,18,000, leading to the initiation of the Corporate Insolvency Resolution Process (CIRP) under the I&B Code.2. Appointment of Interim Resolution Professional (IRP):After the admission of the Corporate Debtor in CIRP, Mr. Mohit Bhuteria was initially appointed as the IRP but later expressed his inability to continue. Subsequently, Mr. Ardhendu Shekhar Raut was appointed as the IRP following the recommendation of the Insolvency and Bankruptcy Board of India (IBBI).3. Dispute over the assets of the corporate debtor:The IRP discovered a residential flat owned by the corporate debtor, which was allegedly in dispute as various parties, including an occupier, challenged its status as the corporate debtor's asset. This dispute hindered the resolution process, as evidenced by pending applications and legal actions.4. Failure to receive any resolution plan within the stipulated time:Despite multiple meetings and public announcements, no resolution plan was submitted within the mandated period. The absence of a viable resolution plan led to the inability to resolve the insolvency of the Corporate Debtor within the stipulated CIRP period.5. Liquidation order under section 33 of the I&B Code:Due to the lack of a resolution plan and the completion of the CIRP period without successful resolution, the Tribunal was compelled to order the liquidation of the Corporate Debtor under section 33 of the I&B Code. The Liquidator was appointed, and the process of liquidation was directed to commence in accordance with the statutory regulations.In conclusion, the judgment reflects the procedural and substantive aspects of insolvency resolution under the I&B Code, emphasizing the importance of timely resolution plans and the consequences of failure to achieve resolution within the prescribed timelines. The dispute over the assets of the corporate debtor and the subsequent liquidation order underscore the significance of adherence to the statutory framework for effective insolvency proceedings.