Tribunal Sets Liquidator Fees, Mandates Oversight, Grants Revival Chance under Approved Scheme

The Tribunal approved the Liquidator's fees based on unamended regulations, directed prompt payment of CIRP costs, rejected the application of post-amendment regulations, established a mediation process for liquidation cost disputes, and mandated the Liquidator's oversight until full payment realization. The Corporate Debtor was granted a chance to revive under the approved Scheme, with lapsing back to liquidation mode as a consequence of non-compliance.

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Issues Involved:
1. Approval and payment of Liquidator's fees.
2. Priority of CIRP cost and Liquidation expenses.
3. Applicability of pre-amendment and post-amendment regulations.
4. Dispute resolution regarding Liquidation costs.
5. Implementation and monitoring of the Scheme.

Issue-wise Detailed Analysis:

1. Approval and payment of Liquidator's fees:
The Liquidator sought approval for his fees and payment within thirty days from the approval of the Scheme. The Tribunal noted that the fees payable to the Liquidator should be calculated based on the unamended regulations, as the liquidation order was passed before the amendment date of 25.07.2019. According to Regulation 4(3) of the IBBI (Liquidation Process) Regulations, 2016, the Liquidator's fees are to be computed based on realization and distribution percentages. The Tribunal found the Liquidator's calculation of Rs. 91,69,768/- (Rs. 70,69,670/- for realization and Rs. 21,00,098/- for distribution) sustainable and approved it.

2. Priority of CIRP cost and Liquidation expenses:
The Liquidator contended that CIRP cost and liquidation expenses, including his fees, should have priority over other payments under the Scheme. The Tribunal directed that the CIRP cost of Rs. 135 lakh, ratified by the CoC, should be paid within seven days from the date of the order. The Liquidator's fees and other liquidation costs were to be paid based on actual expenses incurred and sufficient proof provided by the Liquidator.

3. Applicability of pre-amendment and post-amendment regulations:
The Tribunal emphasized that the unamended regulations should apply, as the liquidation order was passed before the amendment date. The Tribunal rejected the Scheme proponents' argument to apply the amended regulations as a guide. The Tribunal also noted the principle of 'casus omissus' to fill gaps in the regulations, applying the pre-amendment regulations fastidiously.

4. Dispute resolution regarding Liquidation costs:
The Tribunal directed that any disputes regarding liquidation costs, other than the Liquidator's fees, should go to mediation before the independent Statutory Auditor of the Corporate Debtor. The auditor was to scrutinize the accounts and vouchers and ascertain the liquidation costs payable within thirty days from the date of the order.

5. Implementation and monitoring of the Scheme:
The Tribunal directed the Liquidator to act as an independent observer in the Board of the Corporate Debtor/Implementing Agency of the Scheme until all payments were realized and distributed. Any infraction by the Scheme proponents in implementing the Scheme or paying the Liquidator's fees would result in the Corporate Debtor lapsing back into liquidation mode, with the Liquidator resuming his role.

Conclusion:
The application was disposed of with the Tribunal approving the Liquidator's fees, directing the payment of CIRP costs, applying pre-amendment regulations, setting up a dispute resolution mechanism for liquidation costs, and outlining the implementation and monitoring process for the Scheme. The liquidation process was temporarily revoked to enable the Corporate Debtor to revive and reconstruct under the sanctioned Scheme.

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