2019 (10) TMI 417 - Tri - Insolvency and Bankruptcy

Tribunal Orders Liquidation of Corporate Debtor: RP appointed as Liquidator

The Tribunal approved the liquidation of the Corporate Debtor based on the unanimous decision of the Committee of Creditors (CoC) as no viable resolution ... Liquidation under the Insolvency and Bankruptcy Code, 2016 - resolution of the Committee of Creditors for liquidation - appointment of liquidator and vesting of management powers - public notice and intimation to Registrar of Companies - liquidator's duties under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - liquidator's fees payable from the liquidation estate under Section 53 - bar on institution of suits or legal proceedings without prior approval of the Adjudicating Authority - deemed notice of discharge to officers, employees and workmen on liquidationResolution of the Committee of Creditors for liquidation - liquidation under the Insolvency and Bankruptcy Code, 2016 - The unanimous resolution of the Committee of Creditors for liquidation was accepted and the application under Section 33(2) of the Code was allowed. - HELD THAT: - The Bench recorded that after admission of the petition and constitution of the Committee of Creditors, valuers were appointed and the liquidation value was determined. No viable resolution plan materialised and the CoC passed a unanimous resolution for liquidation. The Tribunal was satisfied with the CoC's resolution dated 20.06.2019 and allowed the application filed under Section 33(2), directing liquidation of the corporate debtor in accordance with the Code.Application MA/677/2019 filed in CP/1083/IB/2018 allowed and corporate debtor ordered to be liquidated.Appointment of liquidator and vesting of management powers - liquidator's duties under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - public notice and intimation to Registrar of Companies - liquidator's fees payable from the liquidation estate under Section 53 - bar on institution of suits or legal proceedings without prior approval of the Adjudicating Authority - deemed notice of discharge to officers, employees and workmen on liquidation - Appointment of the Resolution Professional as Liquidator and ancillary directions for carrying out the liquidation process were made. - HELD THAT: - The Tribunal appointed the then Resolution Professional to act as Liquidator and directed issuance of a public notice and transmission of the order to the Registrar of Companies. On liquidation, the powers of the board, key managerial personnel and partners cease and vest in the Liquidator, and corporate personnel must cooperate with him. The Liquidator is to perform functions under the Code and the Liquidation Process Regulations; fees are to be charged in proportion to the liquidation estate as specified in Regulation 4 and paid from proceeds of the liquidation estate under Section 53. Further, no suit or other legal proceedings shall be instituted by or against the corporate debtor without prior approval of the Adjudicating Authority except as permitted by the Code, and the order shall operate as notice of discharge to officers, employees and workmen except where business is continued during liquidation.Mr. A.R. Ramasubramania Raja appointed as Liquidator and directed to carry out liquidation in accordance with the Code and Regulations with the stated ancillary directions.Final Conclusion: The Tribunal allowed the application under Section 33(2) based on the CoC's unanimous resolution, ordered liquidation of the corporate debtor, appointed the Resolution Professional as Liquidator, and issued directions concerning public notice, ROC intimation, vesting of management powers, cooperation by personnel, liquidation functions, fee mechanism under Regulation 4 and payment from the liquidation estate under Section 53, bar on suits without approval, and deemed discharge of employees. Issues: Liquidation of Corporate DebtorAnalysis:1. Background: The Company Petition was admitted with the appointment of an Interim Resolution Professional (IRP) followed by the constitution of the Committee of Creditors (CoC) and valuation of the Corporate Debtor.2. Resolution Plan: Despite efforts, no Resolution Applicant proposed a viable plan, leading the CoC to unanimously pass a resolution for liquidation on 20.06.2019.3. Liquidation Order: The Resolution Professional (RP) filed an application under section 33(2) of the Insolvency & Bankruptcy Code, 2016, seeking liquidation based on the CoC's resolution.4. Decision: The Tribunal, satisfied with the CoC's decision, ordered the liquidation of the Corporate Debtor. The order included various directions:- Issuing a public notice for liquidation as per the Code's provisions.- Appointment of the RP as the Liquidator with full authority over the Corporate Debtor's affairs.- Stipulation of fees for the Liquidator based on the value of the liquidation estate assets.- Prohibition on legal proceedings against the Corporate Debtor without the Tribunal's approval.- Notice of discharge to officers, employees, and workmen, except during the continued business operation by the Liquidator.- Directives for the Liquidator to comply with the Code and relevant regulations.5. Implementation: The Tribunal allowed the filed application, thereby approving the liquidation process for the Corporate Debtor as per the CoC's resolution and the legal provisions of the Insolvency & Bankruptcy Code, 2016.This detailed analysis covers the background, resolution plan, liquidation order, decision, and implementation aspects of the Tribunal's judgment regarding the liquidation of the Corporate Debtor.