2020 (3) TMI 1433 - Tri - Insolvency and Bankruptcy

Corporate debtor's liquidation approved due to failed resolution plans. Liquidator assumes control per Insolvency and Bankruptcy Code.

ICICI Bank Limited Versus SR Foils and Tissue Limited

The application for liquidation of a corporate debtor was granted based on a resolution passed by the Committee of Creditors (CoC) with 84.22% voting ... Liquidation of the corporate debtor - Section 33(2) of I&B Code - HELD THAT:- Though this company petition has been admitted on 07.08.2017, till date neither resolution plan has come for approval before this Bench, nor has this bench decided the liquidation application pending before this Bench despite soon after two and half years passed by now. This objector has come before this Bench asking for another round of invitation of EOI is not acceptable because the CIRP period has already been over on 03.06.2019, therefore, this company petition is fit for passing the liquidation order because it is the CoC that has taken a decision that the liquidation is the only course left to it to proceed, whereby, it is ordered for liquidation of the company with the directions imposed. Application allowed. Issues involved:Liquidation of corporate debtor based on CoC resolution with 84.22% voting share, determination of undervalue transaction, failure of prospective resolution applicant to place EMD along with EOI, request for another round of EOI after CIRP period, appointment of liquidator, cessation of powers of board of directors and key managerial personnel, fees for conduct of liquidation proceedings, prohibition on legal proceedings without approval, discharge of officers and employees except during continued business, functions of the liquidator.Liquidation based on CoC resolution:The application moved by the RP under Section 33(2) of the Code sought liquidation of the corporate debtor following a resolution passed by the CoC with 84.22% voting share. The CP was admitted on 07.08.2017, and after the constitution of the CoC on 28.08.2017, the RP was confirmed. Two valuers were appointed to determine the liquidation value, resulting in a valuation of Rs. 30.03 crores. Despite multiple Invitations of Expression of Interest, only one prospective resolution applicant came forward but failed to place the EMD along with the EOI, leading to the decision for liquidation.Undervalue transaction determination:The RP had been engaged in determining undervalue transactions, and despite the objector's claims regarding appropriation of EMD amounts, the RP clarified that the appropriation was not at the RP's volition. The objector argued that given another chance, they could submit a resolution plan exceeding the determined liquidation value. However, the Bench noted the lapse of the CIRP period and the CoC's decision, leading to the order for liquidation.Appointment of liquidator and cessation of powers:The Bench ordered the corporate debtor's liquidation, appointing the Resolution Professional as the Liquidator. Consequently, all powers of the board of directors, key managerial personnel, and partners ceased to have effect, vested in the Liquidator. The personnel were directed to cooperate with the liquidation proceedings, with the Liquidator charging fees as per regulations. Legal proceedings against the corporate debtor were prohibited without prior approval, except as specified in the Code.Functions of the liquidator and discharge of officers:The liquidator was directed to carry out functions as per the Insolvency and Bankruptcy Code and Regulations. The liquidation order served as a notice of discharge to the officers, employees, and workmen of the corporate debtor, except during continued business. The Registry was tasked with communicating the order to relevant parties promptly.Conclusion:The application for liquidation was disposed of, with other related applications dismissed. The decision highlighted the CoC's resolution, the lapse of the CIRP period, and the need for liquidation based on the circumstances presented. The order detailed the process for liquidation, appointment of the Liquidator, and the cessation of powers of the corporate debtor's management, ensuring compliance with the Code and Regulations.