Going-concern sale in liquidation favored where value maximisation justified a limited extension before piecemeal sale.

The liquidation framework favours value maximisation and beneficial liquidation by first exploring a sale of the corporate debtor as a going concern and related compromise or arrangement mechanisms. On the facts recorded, repeated public announcements, extensions of time and invitations to interested parties were treated as adequate compliance, so the allegation of deficient publicity or arbitrary conduct by the liquidator was rejected. The timelines under the liquidation regulations were treated as directory in the circumstances, and the period lost during lockdown was taken into account. A limited further period was granted to test whether a going-concern sale could be achieved at a better value before resorting to piecemeal sale.

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Issues: (i) whether the liquidator had failed to comply with the earlier directions to invite and process proposals for sale of the corporate debtor as a going concern, including adequate publicity for interested bidders; (ii) whether, in the facts of the case, the liquidation process should be given further time to enable consideration of proposals and sale of the corporate debtor as a going concern before resorting to piecemeal sale.

Issue (i): whether the liquidator had failed to comply with the earlier directions to invite and process proposals for sale of the corporate debtor as a going concern, including adequate publicity for interested bidders.

Analysis: The record showed repeated public announcements, extensions of time, circulation of invitations to interested persons, and consideration of proposals placed before the stakeholders. The liquidator had acted in line with the earlier directions to attempt revival through compromise or arrangement under section 230 of the Companies Act, 2013, and then to proceed to sale as a going concern if no compliant scheme emerged. The contention that there was no sufficient publicity or that the liquidator had acted arbitrarily was rejected.

Conclusion: The allegation of deficiency or non-compliance against the liquidator was not accepted.

Issue (ii): whether, in the facts of the case, the liquidation process should be given further time to enable consideration of proposals and sale of the corporate debtor as a going concern before resorting to piecemeal sale.

Analysis: The scheme of liquidation under the Code, read with the liquidation regulations, permits sale of the corporate debtor as a going concern and emphasizes beneficial liquidation and value maximisation. The timelines under the liquidation regulations were treated as directory in the circumstances, and the period lost during lockdown was also considered. Since stakeholders, including the principal financial creditor, still desired consideration of proposals and the liquidation process had recently moved through stakeholder meetings and auction steps, a short further period was found appropriate to test whether a going-concern sale could be achieved at a better value.

Conclusion: The Tribunal granted a further six weeks to enable sale of the corporate debtor as a going concern, with subsequent time for the liquidator to complete the process if EMD was deposited, while leaving the merits of the proposals open.

Final Conclusion: The appeals and interlocutory applications were disposed of with directions permitting a limited further opportunity to pursue a going-concern sale in aid of beneficial liquidation, without disturbing the liquidator's conduct otherwise or pronouncing on the merits of the competing proposals.

Ratio Decidendi: In liquidation, the liquidator and the Tribunal must pursue value maximisation and beneficial liquidation by first exploring a going-concern sale and related compromise or arrangement mechanisms, and the prescribed liquidation timelines may be treated as directory where exceptional circumstances justify a limited extension consistent with the Code.

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