Liquidation under insolvency law follows when no viable resolution plan is approved and creditors resolve to liquidate

Where the Corporate Insolvency Resolution Process had run its course without any approved and viable resolution plan, and the Committee of Creditors resolved by the requisite majority to liquidate, the statutory conditions for liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 were satisfied. The Adjudicating Authority therefore ordered liquidation of the corporate debtor, with liquidation proceedings to commence in accordance with the Code and the moratorium to cease upon commencement of liquidation.

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Issues: Whether, on the failure of the resolution process and absence of any viable resolution plan, the Corporate Debtor was liable to be ordered into liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The Corporate Insolvency Resolution Process had been admitted earlier and the Resolution Professional had undertaken the prescribed steps for public announcement, invitation of claims, constitution of the Committee of Creditors, and invitation of expressions of interest and resolution plans. The available plans were either rejected by the Committee of Creditors or did not culminate in any approved and feasible resolution. The Committee of Creditors thereafter resolved, by the requisite majority, to recommend liquidation. In these circumstances, and upon the expiry of the extended resolution period without an approved resolution plan, the statutory conditions for liquidation were satisfied.

Conclusion: The application for liquidation was allowed and the Corporate Debtor was ordered to be liquidated under Section 33 of the Insolvency and Bankruptcy Code, 2016.

Final Conclusion: Liquidation proceedings were directed to commence, with consequential cessation of the moratorium and vesting of liquidation powers in the appointed liquidator in accordance with the Code.

Ratio Decidendi: Where no viable resolution plan is approved within the permissible resolution period and the Committee of Creditors resolves to liquidate, the Adjudicating Authority is empowered to order liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016.

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