2020 (2) TMI 439 - Tri - Insolvency and Bankruptcy

Adjudicating Authority upholds liquidation order for Corporate Debtor despite rejected Resolution Plan request

The Adjudicating Authority upheld the liquidation order for the Corporate Debtor after the Committee of Creditors decided to close the Corporate ... Liquidation order - initiation of liquidation before this Adjudicating Authority due to non-receipt of any resolution plan from any prospective applicant - Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- This Adjudicating Authority is of the considered view to pass an order for liquidation in respect of the Corporate Debtor viz. Asis Logistics Limited and direct the Liquidator to issue a public announcement stating that the Corporate Debtor is in liquidation. However, this Adjudicating Authority would like the Liquidator to make sincere efforts to sell the liquidating unit as a going concern since this would entail realisation of higher value by the creditors and would also save the employment of many workers and employees whose daily bread is dependent on the Corporate Debtor. This Adjudicating Authority hereby appoints the 'Resolution Professional as Liquidator' under Section 34(1) of the IBC. The Liquidator shall send intimation to the Registrar of Companies with which the Corporate Debtor is registered - The Liquidator shall act as per Section 35 of the Insolvency and Bankruptcy Code, 2016 subject to directions of this Adjudicating Authority. Application disposed off. Issues Involved:Liquidation order under Section 33 of the Insolvency and Bankruptcy Code, 2016; Consideration of Resolution Plan by Association of Employees of Suspended Management under Section 60 of IBC; Jurisdiction of the Adjudicating Authority over the decision of the Committee of Creditors.Analysis:Liquidation Order under Section 33 of IBC:The Resolution Professional (RP) filed an application seeking a liquidation order under Section 33 of the Insolvency and Bankruptcy Code, 2016. The Corporate Insolvency Resolution Process (CIRP) had commenced earlier based on a petition by the Corporate Debtor. The Committee of Creditors (CoC) decided to close the CIRP due to the absence of any resolution plan, prompting the RP to file the liquidation application. The Adjudicating Authority noted the timeline of events and found that the CIRP had closed before the liquidation application was filed.Consideration of Resolution Plan by Association of Employees under Section 60 of IBC:An Association claiming to represent all Employees of Suspended Management filed an Interlocutory Application under Section 60 of IBC, requesting consideration of their Resolution Plan and challenging the decision of the CoC to liquidate the Corporate Debtor. The Adjudicating Authority examined the Association's claims and the documents submitted. It was found that the Association was not a registered body, and the CoC's decision to proceed with liquidation was upheld. Citing legal precedents, the Authority emphasized the commercial aspects of resolution plans being within the CoC's domain, with limited scope for judicial intervention unless decisions are contrary to the law.Jurisdiction of the Adjudicating Authority over CoC's Decision:The Adjudicating Authority highlighted the supremacy of the CoC in commercial matters and the limited jurisdiction of the National Company Law Tribunal to review CoC's decisions unless they are perverse or unlawful. Referring to legal judgments, the Authority emphasized that the Tribunal cannot question the CoC's commercial wisdom or decisions unless they violate the provisions of the Code or existing laws. Consequently, the Interlocutory Application was deemed not maintainable, and the liquidation order for the Corporate Debtor was upheld.In conclusion, the Adjudicating Authority ordered the liquidation of the Corporate Debtor and appointed the Resolution Professional as the Liquidator. The Liquidator was directed to issue a public announcement regarding the liquidation and make efforts to sell the unit as a going concern to maximize creditor value and preserve employment. The Liquidator was instructed to comply with the provisions of the Insolvency and Bankruptcy Code, subject to the Authority's directions, thereby disposing of the application accordingly.