Tribunal orders liquidation of Ashoka Multiyarn Mills Limited under IBC - Sections 33(5) and 33(6)

The Tribunal ordered the liquidation of the Corporate Debtor, Ashoka Multiyarn Mills Limited, appointing the current Resolution Professional as the liquidator due to the rejection of the resolution plan and the expiration of the CIRP period. The judgment lifted the moratorium, applying Sections 33(5) and 33(6) of the IBC, 2016, for the liquidation process to proceed in compliance with relevant regulations.

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Issues Involved:
1. Liquidation of the Corporate Debtor.
2. Rejection of proposed resolution plans by the Committee of Creditors (CoC).
3. Compliance with the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).
4. Classification and claims of creditors.
5. Appointment of a liquidator.

Detailed Analysis:

1. Liquidation of the Corporate Debtor:
The Tribunal considered the liquidation of the Corporate Debtor due to the rejection of the proposed resolution plan by the CoC in multiple meetings. The CoC recommended liquidation following the rejection of the sole resolution plan. The Tribunal noted that the liquidation should be a last resort, but in this case, it was deemed necessary due to the lack of an approved resolution plan and the expiration of the CIRP period.

2. Rejection of Proposed Resolution Plans by the CoC:
The resolution plan submitted by the Corporate Debtor's Board of Directors was rejected by the CoC in its meeting held on 08.08.2018. The voting results showed a 95.3% rejection, with the principal Financial Creditor, Union Bank of India, and other creditors voting against the plan. The CoC had previously considered other potential resolution applicants who later withdrew, leaving the Board of Directors' plan as the sole proposal, which was ultimately rejected.

3. Compliance with CIRP under IBC, 2016:
The Tribunal reviewed the compliance with the CIRP process, noting the sequence of events and meetings held by the CoC. The process began with the admission of the petition filed by Union Bank of India on 15.11.2017. The IRP made public announcements for claims, and multiple CoC meetings were held to discuss interim finance, classification of creditors, and resolution plans. Despite efforts to extend the CIRP period by 90 days, no viable resolution plan was approved.

4. Classification and Claims of Creditors:
The IRP received claims from both Financial and Operational Creditors. The largest claims were from two Financial Creditors, with significant claims from related parties and Operational Creditors. The CoC meetings discussed the classification of creditors, including a dispute over whether Gangpur Weavers Co-operative Spinning Mills Limited should be classified as a 'Secured Financial Creditor' or an 'Operational Creditor.' The total claims admitted against the Corporate Debtor amounted to Rs. 86,16,30,246.

5. Appointment of a Liquidator:
The Tribunal ordered the liquidation of the Corporate Debtor and appointed the current Resolution Professional (RP), Mr. Pinaki Sircar, as the liquidator. The liquidator was directed to issue a public announcement of the liquidation, communicate with the Registrar of Companies, and notify relevant tax and revenue authorities. The liquidator is also required to file periodic reports with the Tribunal as mandated by the IBC and associated regulations.

Conclusion:
The judgment concluded with the Tribunal ordering the liquidation of the Corporate Debtor, Ashoka Multiyarn Mills Limited, due to the rejection of the resolution plan and the expiration of the CIRP period. The RP, Mr. Pinaki Sircar, was appointed as the liquidator to carry out the liquidation process in accordance with the IBC, 2016 and related regulations. The moratorium granted under Section 14 of the IBC was lifted, and the provisions of Sections 33(5) and 33(6) were made applicable.

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