2020 (4) TMI 864 - Tri - Insolvency and Bankruptcy

Tribunal Orders Liquidation of Corporate Debtor, Appoints Liquidator

The Tribunal ordered the liquidation of the Corporate Debtor, appointed Mr. Rajeev Bansal as the Liquidator, and issued directions for compliance with the ... Approval of Resolution Plan - time limitation of the process - expiry of the process - the CIRP is stated to have expired on 8-7-2019 and no resolution plan under section 30 (6) of the Code was received by the AA before that date - HELD THAT:- In the instant application filed by the RP, it is stated that despite issue of invitation for Expression of Interest in Form G on 26-12-2018 with last date of submission as 31-1-2019 and extension of the last date to 20-2-2019, three Expressions of Interest were received. It is further stated that despite the last date of 2-4-2019 for submission of resolution plans and extension of the date twice to 3-6-2019, no resolution plan was received. No resolution plans are stated to be received even on 08-11-2019, when the 14th meeting of CoC was convened. It is stated in the instant application that since Agenda Item No. 7 relating to appointing a Liquidator and approving the fees to be paid to the Liquidator was not approved by the CoC in its 14th meeting held on 08-11-2019, the applicant has not given his consent to act as a Liquidator and the AA may appoint a Liquidator for Isolux in terms of section 34 (4) (c) of the Code. On the failure of the RP Shri Vikram Kumar to submit the written consent, the AA is empowered under section 34 (4) of the Code to replace the RP by following the procedure provided for in section 34 (5) to (7) of the Code. As regards Regulation 39B, the CoC did not approve any plan for providing contribution for meeting the difference between the excess of estimated liquidation costs over the liquid assets and was of the view that the estimated liquidation costs can be approved quarterly in the stakeholder consultation committee to be constituted as per Regulation 31A of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Liquidation Process Regulations, 2016). The plan under Regulation 39B (3) of the CIRP Regulations, 2016 has not been approved by the CoC - After taking into consideration the discussion by the CoC in the 14th meeting held on 08-11-2019, the Liquidator may take necessary action under Regulation 2A of the Liquidation Process Regulations, 2016. It is directed that all the directions/requirements and provisions of Chapter III of the Code and Liquidation Process Regulations, 2016 shall be strictly complied with. Issues Involved:1. Application for liquidation under section 33 (1) (a) of the Insolvency and Bankruptcy Code, 2016.2. Appointment of a Liquidator.3. Compliance with Regulations 39B, 39C, and 39D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.4. Directions and compliance under Chapter III of the Insolvency and Bankruptcy Code and Liquidation Process Regulations, 2016.Detailed Analysis:1. Application for Liquidation under Section 33 (1) (a) of the Insolvency and Bankruptcy Code, 2016:The Resolution Professional (RP) filed an application seeking the liquidation of Corporate Debtor-Isolux Corsan India Engg & Construction Pvt. Ltd. (Isolux) under section 33 (1) (a) of the Insolvency and Bankruptcy Code, 2016. The Corporate Insolvency Resolution Process (CIRP) was initiated on 11-10-2018, and the RP was appointed. Despite multiple extensions and invitations for Expression of Interest (EOI), no resolution plans were received by the final date of 3-6-2019. Consequently, the Committee of Creditors (CoC) unanimously decided to liquidate Isolux as per section 33 (1) (a) of the Code.2. Appointment of a Liquidator:In the 14th meeting of the CoC held on 08-11-2019, the agenda to appoint a Liquidator and approve the fees was disapproved. Consequently, the RP did not consent to act as the Liquidator. As per section 34 (4) (c) of the Code, the Adjudicating Authority (AA) appointed Mr. Rajeev Bansal as the Liquidator, following the procedure under sections 34 (5) to (7) of the Code. The Law Research Associate confirmed the credentials of Mr. Rajeev Bansal, and no adverse findings were reported.3. Compliance with Regulations 39B, 39C, and 39D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016:- Regulation 39B: The CoC did not approve a plan for providing contributions to meet the liquidation costs. Instead, a corpus of Rs. 30.00 lacs was sanctioned initially, to be contributed by CoC members in proportion to their voting share. Subsequent contributions were to be made quarterly.- Regulation 39C: The CoC approved the sale of Isolux’s business as a going concern, specifically the EPC contract awarded by NHAI for the construction of a section of NH 75 in Karnataka.- Regulation 39D: Since the CoC did not approve the Liquidator’s fees, it was to be paid in accordance with Regulation 4 (2) and 4 (3) of the Liquidation Process Regulations, 2016.4. Directions and Compliance under Chapter III of the Insolvency and Bankruptcy Code and Liquidation Process Regulations, 2016:The Tribunal issued several directions to ensure compliance with Chapter III of the Code and the Liquidation Process Regulations, 2016:- Section 33(5): No suits or legal proceedings shall be instituted against the corporate debtor, except with the Liquidator’s approval.- Notice of Discharge: The liquidation order serves as a notice of discharge to the officers, employees, and workmen, unless the business continues during liquidation.- Powers of the Board of Directors: These powers cease and vest in the Liquidator.- Assistance and Cooperation: Corporate Debtor personnel must assist the Liquidator as required.- Public Announcement: The Liquidator must publish an announcement within five days, calling stakeholders to submit claims within 30 days.- Preliminary Report: The Liquidator must file a preliminary report within 75 days and regular progress reports every fortnight.The Financial Creditors are not restricted from enforcing personal guarantees. The Liquidator is directed to take possession of the Corporate Debtor’s assets.Conclusion:The Tribunal ordered the liquidation of Isolux under section 33 (1) (a) of the Code, appointed Mr. Rajeev Bansal as the Liquidator, and provided detailed directions to ensure compliance with the relevant provisions and regulations. The application CA No. 1079/2019 was disposed of accordingly.