2019 (6) TMI 75 - Tri - Insolvency and Bankruptcy

Tribunal orders Liquidation Proceedings for Corporate Debtor post failed Resolution Plan

State Bank of India Versus M/s. Summer India Textiles Mills Private Limited

The Tribunal granted the application for the initiation of Liquidation Proceedings against the Corporate Debtor, citing the completion of the Corporate ... Initiation of the Liquidation Proceedings against the Corporate Debtor - Liquidation of Corporate Debtor under section 33(1)(a) of the I&B Code - carrying on the business of the Corporate Debtor for its beneficial liquidation in terms of section 35(1)(e) of I&B Code - appointment of Applicant/Resolution Professional as the Liquidator under section 34 of the I&B Code - HELD THAT:- In the grounds, the Resolution Professional has stated that as per Section 33(1)(a), upon completion of the maximum period under section 12 of the I&B Code, 2016, this Authority may pass an order requiring the Corporate Debtor to be liquidated as laid down under Chapter III of the I&B Code, 2016. It is stated by the Resolution Professional that no Resolution Plan was approved by the CoC, the maximum period of 270 days has also been completed on 30.10.2018, and therefore, the Corporate Debtor may be ordered for liquidation on a 'going concern' basis - Since, no Resolution Plan has been received by this Authority under sub-section (6) of Section 30 of the I&B Code, 2016, before the expiry of the maximum period of 270 days of CIR Process, the Corporate Debtor has to be ordered for Liquidation. Application filed by the Resolution Professional under Section 33(l)(a) of the I&B Code, 2016, for initiation of the Liquidation Proceedings against the Corporate Debtor viz., M/s. Summer India Textiles Mills Private Limited is allowed. Issues:- Application for liquidation of Corporate Debtor under section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016- Business continuation for beneficial liquidation under section 35(1)(e) of I&B Code- Appointment of Resolution Professional as Liquidator under section 34 of I&B Code- Legal proceedings and challenges faced by the Director of the Corporate DebtorAnalysis:1. Application for Liquidation: The Resolution Professional filed an application seeking the liquidation of the Corporate Debtor under section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016. The application included prayers for liquidation, business continuation for beneficial liquidation, and appointment of the Resolution Professional as the Liquidator. The Resolution Professional highlighted that no Resolution Plan was approved by the Committee of Creditors (CoC) within the stipulated time frame, leading to the completion of the maximum period for Corporate Insolvency Resolution Process (CIR Process).2. Business Continuation for Liquidation: The Resolution Professional conducted various meetings of the CoC to discuss valuation reports and received a Resolution Plan from a party. However, due to legal challenges faced by the Director of the Corporate Debtor, including petitions filed in High Court, NCLAT, and the Supreme Court, the resolution process faced delays. Despite efforts to seek extensions and consider Resolution Plans, the CoC ultimately resolved to liquidate the Corporate Debtor as per section 33 of the I&B Code.3. Director's Legal Challenges: The Director of the Corporate Debtor filed multiple legal challenges against the insolvency proceedings, including petitions in the High Court, NCLAT, and the Supreme Court. Despite various orders and directions from the courts, including granting time for debt repayment, the Director failed to comply with the requirements. The legal challenges and delays caused disruptions in the insolvency process, leading to the ultimate decision for liquidation of the Corporate Debtor.4. Liquidation Order: Based on the facts presented by the Resolution Professional and the completion of the CIR Process without an approved Resolution Plan, the Tribunal proceeded to pass a Liquidation Order. The Order detailed the appointment of the Resolution Professional as the Company Liquidator, cessation of the moratorium, transfer of powers to the Liquidator, and instructions for communication and compliance with relevant authorities. The order emphasized the conduct of liquidation proceedings and the role of the Company Liquidator in managing the affairs of the Corporate Debtor during the liquidation process.In conclusion, the Tribunal allowed the application for the initiation of Liquidation Proceedings against the Corporate Debtor, emphasizing the completion of the CIR Process without an approved Resolution Plan and the necessity for liquidation as per the provisions of the Insolvency and Bankruptcy Code, 2016. The detailed order outlined the responsibilities and procedures for the liquidation process, highlighting the role of the Company Liquidator in managing the affairs of the Corporate Debtor during the liquidation period.