Going-concern sale in liquidation allows closure without dissolution; pending avoidance claims do not bar closure or fasten pre-sale debt on bidder.

Where a corporate debtor is sold as a going concern, the liquidation process may be closed without ordering dissolution, as Regulation 45(3)(a) contemplates closure in that situation and section 54 applies only where assets have been completely liquidated. Pending avoidance applications do not by themselves prevent closure, because liquidation may be completed notwithstanding such proceedings, which can continue separately. A successful bidder cannot be directed through the liquidation process to satisfy pre-sale claims of an operational creditor unless the governing insolvency framework so provides. The liquidation was therefore treated as closable without dissolution, the avoidance proceedings were left to continue independently, and relief against the bidder was refused.

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Issues: (i) whether the liquidation process of a corporate debtor sold as a going concern could be closed without ordering dissolution; (ii) whether the pending avoidance application prevented closure of the liquidation process; (iii) whether the successful bidder could be directed to satisfy pre-existing claims of an operational creditor.

Issue (i): Whether the liquidation process of a corporate debtor sold as a going concern could be closed without ordering dissolution.

Analysis: Section 54 of the Insolvency and Bankruptcy Code, 2016 contemplates dissolution only where the assets of the corporate debtor have been completely liquidated, while Regulation 45(3)(a) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 specifically provides for closure of the liquidation process where the corporate debtor is sold as a going concern. The liquidation had commenced before the amendment introducing the clarification in Regulation 45, but the sale as a going concern had been completed and the proceeds had been distributed. In that setting, the liquidation process could be closed without directing dissolution.

Conclusion: The issue was answered in favour of closure of liquidation without dissolution.

Issue (ii): Whether the pending avoidance application prevented closure of the liquidation process.

Analysis: Regulation 44(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, as substituted, states that liquidation is to be completed notwithstanding pendency of avoidance applications. The pending application concerning avoidable transactions did not justify keeping the liquidation process open, particularly when the corporate debtor was not being dissolved and the liquidator was directed to continue pursuing the avoidance proceedings separately.

Conclusion: The pendency of the avoidance application did not bar closure of the liquidation process.

Issue (iii): Whether the successful bidder could be directed to satisfy pre-existing claims of an operational creditor.

Analysis: The prayers seeking approval of the sale on terms granting immunity from liabilities and seeking directions against the successful bidder for payment of the creditor's claim were not supported by the cited liquidation regulations. The claim of the operational creditor remained a matter to be dealt with under the insolvency framework, and the purchaser of the corporate debtor as a going concern was not made liable for those pre-sale claims through this application.

Conclusion: The request to fasten the operational creditor's claim on the successful bidder was rejected.

Final Conclusion: The liquidation was directed to be closed without dissolution, the avoidance proceedings were left to continue independently, and the separate claim-directed relief against the successful bidder was refused.

Ratio Decidendi: Where a corporate debtor is sold as a going concern, the liquidation process may be closed without dissolution, and pendency of avoidance proceedings does not by itself prevent such closure.

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