2020 (3) TMI 95 - Tri - Insolvency and Bankruptcy

Committee approves liquidation of Rama Krishna Knitters Pvt Ltd, sets fees, issues compliance directions

Punjab National Bank Versus Rama Krishna Knitters (P.) Ltd.

The Committee of Creditors approved the liquidation of Rama Krishna Knitters Private Limited after rejecting a resolution plan and appointing the ... Liquidation of Rama Krishna Knitters Private Limited (Rama Krishna) - Section 33(1) (a) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case, the Adjudicating Authority has not received a resolution plan under Section 30(6) of the Code before the expiry of Insolvency Resolution Process period. We have discussed above that invitation for EOI was published in the newspapers on a number of occasions and that only one resolution plan was received from Swissline Intertrade Private Limited. The said Resolution Plan was considered by the COC in its 11th meeting held on 08.11.2019 and was put to e-vote as Agenda Item No. 11.05. However, 99.85% of the votes were against the acceptance of the resolution plan. The alternative resolution for approval of the liquidation of Rama Krishna under Section 33 of the Code (Agenda Item No. 11.06) was approved with 99.90% votes - The conditions provided for in section 33(1)(a) are satisfied. Therefore order is passed requiring Rama Krishna, to be liquidated in the manner as laid down in Chapter-III of the Code. Further directions for issuance of public announcement stating that Rama Krishna is in liquidation and requiring the order of liquidation to be sent to the authority with which Rama Krishna is registered are given below. Application disposed off. Issues:Liquidation of Rama Krishna Knitters Private Limited under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016.Analysis:1. Initiation of Liquidation Process: The application was filed seeking liquidation under Section 33(1)(a) of the Code as no resolution plan was received within the stipulated time. The Committee of Creditors (COC) considered a resolution plan from Swissline Intertrade Private Limited, but it was dissented with a high percentage of votes. Consequently, the resolution for liquidation was approved by the COC.2. Appointment of Liquidator: The RP was appointed as the Liquidator for the purpose of liquidation, subject to submission of written consent. The COC passed a resolution for the appointment of the RP as the Liquidator, which was duly filed with the Adjudicating Authority.3. Meeting Liquidation Costs: The COC made estimates of liquidation costs and approved a plan for contributions to meet the shortfall between liquid assets and costs. Additionally, the opening of an escrow account for depositing contributions was approved by the COC.4. Sale as a Going Concern: The COC examined the possibility of selling Rama Krishna as a going concern during liquidation but decided that since it was not feasible, assets could be sold in parcels or other modes as per regulations.5. Fees of the Liquidator: The COC considered and fixed the fees payable to the Liquidator during the liquidation process in accordance with the regulations.6. Compliance and Directions: The Liquidator was directed to strictly comply with the provisions of Chapter III of the Code and Liquidation Process Regulations, 2016. Various directions were given, including the publication of public announcements, filing of reports, and taking possession of the assets of the Corporate Debtor.7. Further Actions: The Liquidator was directed to publish public announcements, file reports, and take possession of assets. Financial Creditors were not debarred from enforcing personal guarantees. The case was disposed of, and copies of the order were to be supplied to relevant parties.This detailed analysis covers the key aspects of the judgment regarding the liquidation of Rama Krishna Knitters Private Limited as per the provisions of the Insolvency and Bankruptcy Code, 2016.