2020 (4) TMI 733 - Tri - Insolvency and Bankruptcy

Court Orders Liquidation of Corporate Debtor for Non-Compliance with Resolution Plan

City Union Bank Ltd. Versus V. Kesavan And Mrs. Brinda

The Bench ordered the liquidation of the Corporate Debtor under section 33(3) of the Insolvency & Bankruptcy Code, 2016, due to the Resolution ... Liquidation of Corporate Debtor - liquidation sought on the ground the Resolution Applicant failed to perform the Resolution Plan as stated in the Resolution Plan and for appointment of Mr. Chandramouli Ramasubramaniam as Liquidator of the Corporate Debtor - HELD THAT:- Looking at the attendance sheet file, it appears that these Respondents (Promoter-Directors) appeared on and off but have not come out with any concrete proposal or any promise to comply with the Resolution Plan approved by this Bench. For having already two months gone by after filing this application, we are constrained to pass orders to liquidate the Corporate Debtor under section 33(3) of the Code by directing the erstwhile Resolution Professional (RP) namely, Mr. Chandramouli Ramasubramaniam looking at the written consent given by him, to act as the Liquidator of the Corporate Debtor for the purpose of liquidation of this Corporate Debtor. The Liquidation of Corporate Debtor is ordered in the manner as laid down in the Chapter by issuing a public notice stating that the Corporate Debtor is in liquidation with a direction to the liquidator to send this order to ROC with which this company has been registered. The Registry is hereby directed to immediately communicate this order to the Liquidator, the Corporate Debtor, the IBBI and Concerned ROC by way of e-mail - application allowed. Issues:Liquidation order sought by Financial Creditor due to non-compliance with Resolution Plan by Resolution Applicant.Analysis:The Financial Creditor, a sole Financial Creditor/Applicant, filed an MA under sections 33(3) & 33(4) of the Insolvency & Bankruptcy Code, 2016 seeking liquidation of the Corporate Debtor as the Resolution Applicant failed to adhere to the Resolution Plan. The Resolution Plan, approved by the Bench, required the Resolution Applicant to bring in funds within specified timelines. However, the Resolution Applicant only infused a fraction of the committed amount, leading to non-compliance. Despite multiple adjournments and waiting for the Promoter-Directors to fulfill their obligations, they failed to do so, prompting the Financial Creditor to seek liquidation.The Bench noted the lack of compliance by the Promoter-Directors with the Resolution Plan, as they failed to fulfill their financial commitments within the stipulated timeframes. The Respondents appeared intermittently but did not present any concrete proposals to rectify the non-compliance. After considering the delay and lack of action by the Promoter-Directors, the Bench ordered the liquidation of the Corporate Debtor under section 33(3) of the Code. The erstwhile Resolution Professional was appointed as the Liquidator for the liquidation process.The Bench issued directions for the liquidation process, including issuing a public notice, transferring powers to the Liquidator, and prohibiting legal proceedings without approval. The Liquidator was tasked with managing the affairs of the Corporate Debtor in accordance with the relevant regulations. The order also discharged officers, employees, and workmen of the Corporate Debtor, except where business operations continue during liquidation. The Registry was instructed to communicate the order promptly to all relevant parties.In conclusion, the MA filed by the Financial Creditor was allowed, and the order for liquidation of the Corporate Debtor was issued due to the Resolution Applicant's failure to comply with the approved Resolution Plan, leading to financial non-performance and subsequent liquidation proceedings as per the provisions of the Insolvency & Bankruptcy Code, 2016.