Corporate Debtor Faces Liquidation After Creditors Reject Resolution Plans

The Tribunal ordered the liquidation of the Corporate Debtor, appointing Mr. Vijender Sharma as the liquidator, as the resolution plans were rejected by the Committee of Creditors due to non-compliance with criteria under the Insolvency and Bankruptcy Code. The liquidation process was to proceed as per the relevant regulations, concluding the Corporate Insolvency Resolution Process and lifting the moratorium. Applications challenging the rejection were dismissed.

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Issues Involved:
1. Initiation and culmination of Corporate Insolvency Resolution Process (CIRP).
2. Rejection of resolution plans by the Committee of Creditors (COC).
3. Applications filed by Resolution Applicants challenging the rejection.
4. Analysis of the status reports filed by the Resolution Professional (RP).
5. Consideration of liquidation of the Corporate Debtor (CD).

Detailed Analysis:

1. Initiation and Culmination of CIRP:
The Corporate Insolvency Resolution Process (CIRP) for the Corporate Debtor (CD) was initiated on 03.05.2017. The process involved the appointment of Mr. Ashwani Kumar as the Interim Resolution Professional (IRP), who filed three status reports. Subsequently, the Committee of Creditors (COC) appointed a new Resolution Professional (RP), Mr. Vijender Sharma, whose appointment was confirmed by the Tribunal on 30.06.2017. The CIRP period, including an extension of 90 days, expired on 15.04.2018.

2. Rejection of Resolution Plans by COC:
The Resolution Professional (RP) filed an application for liquidation after the COC, with an 83.45% voting share, rejected the resolution plans submitted by the Resolution Applicants in its 6th meeting held on 16.04.2018. The rejection was due to non-compliance with the criteria laid down by the COC, including the net worth requirement and eligibility under Section 29A of the Insolvency and Bankruptcy Code (IBC), 2016. The COC recommended liquidation as the CD's operations were closed, and there was no realization from any debtor.

3. Applications Filed by Resolution Applicants Challenging the Rejection:
The Resolution Applicants filed applications under Section 60(5) of the IBC, 2016, challenging the rejection of their resolution plans. They argued that the RP erroneously concluded their ineligibility under Section 29A and failed to place the resolution plans before the COC. The Tribunal had earlier directed the RP to place the resolution plans before the COC, which were subsequently rejected by the COC on 13.04.2018.

4. Analysis of the Status Reports Filed by the RP:
The RP filed multiple status reports detailing the progress of the CIRP. The reports included information on the financial status of the CD, the rejection of the resolution plans, and the recommendation for liquidation. The RP also highlighted the difficulties in maintaining the plant and the non-payment of fees to the former RP and the current RP.

5. Consideration of Liquidation of the CD:
The Tribunal, after considering the sequence of events and the rejection of the resolution plans by the COC, concluded that the only recourse available was liquidation under Section 33 of the IBC, 2016. The Tribunal noted that the resolution applicants, who were members of the board of directors of the CD, failed to meet the eligibility criteria and the net worth requirement. The Tribunal also considered the amendments to the IBC, 2016, but found that the resolution applicants did not establish their status as MSME and that the amendments were not applicable retrospectively.

Conclusion:
The Tribunal ordered the liquidation of the Corporate Debtor, appointing Mr. Vijender Sharma as the liquidator. The liquidation process was to follow the provisions of the IBC, 2016, and the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017. The Corporate Resolution Process of the Corporate Debtor was concluded, and the moratorium granted under Section 14 of the IBC, 2016, was lifted. The applications filed by the resolution applicants were dismissed as infructuous.

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