2018 (1) TMI 1674 - Tri - Insolvency and Bankruptcy

Tribunal Orders Company Liquidation under Insolvency Code: Resolution Professional Appointed as Liquidator

IN RE: ESSKAY MOTORS PVT. LTD.

The Tribunal ordered the liquidation of a company under the Insolvency & Bankruptcy Code after the Committee of Creditors decided against reviving the ... Liquidation of the company based on the resolution passed by the complete majority of the Committee of Creditors - section 33(2) of the Insolvency & Bankruptcy Code - HELD THAT:- Since Liquidation order has been passed no suit or other legal proceedings shall be instituted by or against the Corporate Debtor, save and except as mentioned in section 52 of the Code, as to institution of legal proceedings by the Liquidator, he is at liberty to initiate suit or legal proceedings with prior approval of this Adjudicating Authority, but this direction shall not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. The order shall be deemed to be a notice of discharge to the officers, employees and workmen of the Corporate Debtor except to the extent of business the Corporate Debtor carrying - it is directed that the fee shall be paid to the Liquidator as envisaged under Regulation 4 of IBBI (Liquidation Process) Regulations, which forms part of the liquidation cost. Application allowed. Issues:Liquidation of a company under the Insolvency & Bankruptcy Code.Analysis:The judgment pertains to an application filed by the Resolution Professional of a company seeking liquidation based on a resolution passed by the Committee of Creditors. The Corporate Debtor was put into insolvency resolution process following a petition by a financial institution. The Resolution Professional presented the total claims of the Financial Creditors and prepared an Information Memorandum of the Corporate Debtor. Subsequent meetings of the Committee of Creditors discussed valuation reports, revival proposals, and funding arrangements. Despite efforts to revive the company, the CoC decided to proceed with the winding-up due to the unacceptability of the revival proposal. The CoC unanimously resolved for the liquidation of the Corporate Debtor, rejecting proposals for assignment of debts and payment of liquidation value by the Ex-CMD.The Tribunal, after considering submissions and documents, found that the Resolution Professional had followed the procedures under the Insolvency & Bankruptcy Code and its regulations. The valuation report was not disputed by the CoC, leading to the decision to pass a liquidation order under section 33(2) of the Code. Consequently, the Corporate Debtor was ordered to be liquidated, and the Resolution Professional was appointed as the Liquidator. All powers of the corporate debtor's management were vested in the Liquidator. The personnel of the corporate debtor were directed to cooperate with the Liquidator. Legal proceedings against the Corporate Debtor were restricted, with the Liquidator having the authority to initiate suits with the approval of the Adjudicating Authority. The order served as a discharge notice for the corporate debtor's officers, employees, and workmen. The Liquidator was entitled to fees as per the regulations, and public announcements and notifications to the Registrar of Companies were mandated. The Liquidator was directed to initiate the liquidation process in accordance with the Insolvency and Bankruptcy Code and the relevant regulations.