2019 (8) TMI 1847 - Tri - Insolvency and Bankruptcy

Court Orders Liquidation of Corporate Debtor after Failed Resolution Plan

SBER Bank Versus Varrsana Ispat Ltd.

The court admitted the application for Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016, appointed an ... Seeking Liquidation of corporate Debtor - Section 33 of I & B Code, 2016 - HELD THAT:- This is a fit case wherein an order for liquidation is to be passed. The Coc has failed in approving any resolution plans with in the period of CIRP. In the said circumstances, it is unfair and unjust to continue the proceedings in the case in hand. On the other hand, the RP being failed in submitting a resolution plan under Section 30(6) of the I & B Code, 2016, an order for liquidation is liable to be passed under Section 33 of I & B Code, 2016. The Liquidator is empowered to sell the Corporate Debtor company under liquidation as a going concern. The Liquidator can explore all the possibility as to whether the Corporate Debtor can be sold as a going concern failing which, he is also empowered to take steps under Section 230 of the Companies Act, 2013. That being the powers given to the Liquidator, we do not find any justifiable reason to exclude the period of the litigation pending up to the Hon’ble Supreme Court and wait further till the disposal of the appeal pending before the PMLA. Corporate Debtor is ordered to be liquidated - application allowed. Issues:1. Initiation of Corporate Insolvency Resolution Process under Section 7 of I & B Code, 2016.2. Failure to approve resolution plan due to attachment of assets.3. Expiry of CIRP period without resolution plan approval.4. Dismissal of RP's appeal for releasing attachment of assets.5. RP's request for exclusion of CIRP period due to pending litigation.6. RP's appeal for excluding CIRP period dismissed.7. Order for liquidation of Corporate Debtor.Analysis:1. The application was filed by the Financial Creditor to initiate Corporate Insolvency Resolution Process against the Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Bench admitted the application, appointed an Interim Resolution Professional (IRP), and later confirmed the appointment of Resolution Professional (RP) after the CoC's approval.2. The RP filed a final progress report stating that no resolution plan was approved due to the attachment of assets of the Corporate Debtor. Despite efforts to de-attach assets, no resolution applicant showed interest, leading to the expiry of the CIRP period.3. The CIRP period ended without the approval of any resolution plan, even after multiple CoC meetings and discussions with prospective resolution applicants. The RP's request for exclusion of unutilized time due to pending litigation was dismissed.4. RP's appeal for releasing attachment of assets was dismissed, leading to uncertainty in the resolution process. The Bench refrained from passing a liquidation order due to the pending appeal, despite RP's failure to submit a resolution plan within the stipulated time.5. RP sought exclusion of CIRP period due to pending litigation, but the Bench found no justification for further adjournment. RP's expectation of a favorable order from the Appellate Authority under PMLA was deemed insufficient to delay the proceedings.6. The Bench, after considering RP's submissions and CoC's failure to approve any resolution plan, deemed it necessary to pass an order for liquidation under Section 33 of the I & B Code, 2016. RP's readiness to continue as the Liquidator was noted.7. The Liquidator was appointed to sell the Corporate Debtor as a going concern and initiate the liquidation process as per the Code and regulations. The order for liquidation was issued with detailed directions regarding public announcements, moratorium, employee discharge, and reporting requirements.Additional Judgment:An application by the RP to exclude the CIRP period due to pending litigation was dismissed. The Bench found no valid reason to exclude the period solely based on the appeal before the Appellate Authority of PMLA. The application was rejected, and the appeal was disposed of without costs.