NCLT approves liquidation of non-operational Corporate Debtor with untraceable directors

The National Company Law Tribunal, Principal Bench in New Delhi approved the Committee of Creditors' resolution for the liquidation of a Corporate Debtor due to its non-operational status, untraceable directors, and possession of only land in Ghaziabad. The Resolution Professional was appointed as the Liquidator, with full powers over the Corporate Debtor's affairs. The Tribunal directed the commencement of liquidation proceedings, issuance of public notice, and cooperation of Corporate Debtor's personnel with the Liquidator. Legal proceedings against the Corporate Debtor required prior approval, and the Liquidator was tasked with fulfilling IBC and regulatory obligations, concluding the application for liquidation.

---

---

Issues: Application for liquidation of Corporate Debtor based on CoC resolution.

The judgment delivered by the National Company Law Tribunal, Principal Bench in New Delhi pertains to an application filed under section 33(2) of the Insolvency and Bankruptcy Code (IBC) for the liquidation of a Corporate Debtor. The Committee of Creditors (CoC) passed a resolution with 96.7% voting, citing that the Corporate Debtor only possesses land in Ghaziabad, has been non-operational for a significant period, and its Directors are untraceable. The CoC sought liquidation based on these grounds. It was noted that a previous Company Petition against the Corporate Debtor had been admitted earlier. Despite delays in appointing an Authorized Representative, the CoC eventually approved the liquidation proposal with a high percentage of votes. The Resolution Professional (RP) was proposed to act as the Liquidator, and the RP's consent for the appointment was submitted along with the liquidation application.

The Tribunal, upon reviewing the circumstances, agreed with the CoC's decision to opt for liquidation of the Corporate Debtor. Consequently, the Tribunal issued directions for the liquidation process. The Corporate Debtor was ordered to be liquidated as per the provisions outlined in the relevant chapter, with a public notice to be issued declaring the commencement of liquidation and instructing the Liquidator to inform the Registrar of Companies (ROC) where the Corporate Debtor is registered. The RP, Mr. Sanjay Kumar Singh, was appointed as the Liquidator, with all powers of the board of directors, key managerial personnel, and partners of the Corporate Debtor vested in the Liquidator. The personnel of the Corporate Debtor were instructed to cooperate with the Liquidator as necessary. The Liquidator's fees for conducting the liquidation proceedings were to be determined in accordance with the regulations and paid from the proceeds of the liquidation estate.

Furthermore, the Tribunal decreed that no legal proceedings could be initiated against the Corporate Debtor without prior approval, except as permitted by the Code. The liquidation order was deemed a notice of discharge for the Corporate Debtor's officers, employees, and workmen, except where the business operations continue during liquidation. The Liquidator was directed to fulfill the functions prescribed under the IBC and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations. The Registry was instructed to promptly communicate the order to the concerned parties via email, thereby concluding the disposition of the application for liquidation.

---