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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether, on expiry of the corporate insolvency resolution period without approval of any resolution plan, liquidation of the corporate debtor had to follow; (ii) whether the corporate debtor could be directed to be liquidated as a going concern under the liquidation framework.
Issue (i): Whether, on expiry of the corporate insolvency resolution period without approval of any resolution plan, liquidation of the corporate debtor had to follow.
Analysis: The insolvency resolution period had expired and the committee of creditors had not approved any resolution plan. The statutory scheme under Section 33 of the Insolvency and Bankruptcy Code, 2016 requires liquidation where no resolution plan is received within the permitted period or where a plan is rejected for non-compliance. Once the resolution process failed and no fresh offer was received, the corporate debtor became liable to be placed in liquidation.
Conclusion: The issue was answered in favour of liquidation and against continuation of the resolution process.
Issue (ii): Whether the corporate debtor could be directed to be liquidated as a going concern under the liquidation framework.
Analysis: The liquidation framework permits the liquidator to carry on the business of the corporate debtor where necessary for beneficial liquidation, and Regulation 32 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 specifically contemplates sale of the corporate debtor as a going concern. As the corporate debtor was still a going concern and had a large workforce, the direction was that liquidation should proceed in a manner consistent with those statutory powers and obligations.
Conclusion: The issue was answered in favour of permitting liquidation as a going concern where the liquidator considers it necessary.
Final Conclusion: Liquidation of the corporate debtor was ordered, the resolution professional was appointed to act as liquidator, and the liquidation process was to proceed under the Code and the applicable liquidation regulations.
Ratio Decidendi: Where the resolution period expires without approval of a resolution plan, liquidation follows as a statutory consequence, and the liquidation process may be conducted as a going concern if permitted by the Code and the liquidation regulations.
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