Revival before liquidation sale: section 230 compromise must be explored before asset sale in insolvency liquidation.

In liquidation proceedings under the Insolvency and Bankruptcy Code, revival through a compromise or arrangement under section 230 of the Companies Act, 2013 must be explored before the corporate debtor is reduced to asset sale and dissolution. The commentary notes that where liquidation has been ordered after expiry of the resolution timeline and the proposed applicant's eligibility under section 29A is in doubt, the liquidation order itself may not be interfered with on the merits of the offer. Even so, the liquidator is expected to verify claims, take custody of assets, and pursue the section 230 revival route before any sale, with sale as a going concern only if revival fails.

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Issues: (i) Whether the liquidation order warranted interference in view of the appellant's offer and the alleged ineligibility under section 29A of the Insolvency and Bankruptcy Code, 2016. (ii) Whether, after liquidation had been ordered, the liquidator was required to first explore revival through compromise or arrangement under section 230 of the Companies Act, 2013 before proceeding to sale of assets.

Issue (i): Whether the liquidation order warranted interference in view of the appellant's offer and the alleged ineligibility under section 29A of the Insolvency and Bankruptcy Code, 2016.

Analysis: The liquidation had already been ordered after the resolution process had crossed the statutory timeline, and the appellant's eligibility was doubted in terms of section 29A. In that setting, the existing liquidation order was not treated as open to interference on the merits of the appellant's proposed offer.

Conclusion: The challenge to the liquidation order was not accepted.

Issue (ii): Whether, after liquidation had been ordered, the liquidator was required to first explore revival through compromise or arrangement under section 230 of the Companies Act, 2013 before proceeding to sale of assets.

Analysis: The decision emphasised that liquidation is a last resort and that the statutory scheme under the Insolvency and Bankruptcy Code, 2016 and section 230 of the Companies Act, 2013 requires an attempt at revival before the corporate debtor is finally subjected to dissolution. The liquidator was therefore directed to act in accordance with the revival-oriented framework, verify claims, take custody of assets, and proceed under section 230 before any sale of the corporate debtor's assets, with sale as going concern to follow if revival failed.

Conclusion: The liquidator was required to first take steps under section 230 of the Companies Act, 2013 and only thereafter proceed with sale if revival did not succeed.

Final Conclusion: The appeal was disposed of with directions preserving the liquidation order while mandating that revival measures under section 230 be pursued before any final asset sale or closure of the corporate debtor.

Ratio Decidendi: In liquidation proceedings under the Insolvency and Bankruptcy Code, 2016, revival through a compromise or arrangement must be explored under section 230 of the Companies Act, 2013 before the corporate debtor is reduced to asset sale and ultimate liquidation.

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