Tribunal grants liquidation application, appoints Liquidator under Insolvency and Bankruptcy Code

The Tribunal allowed the application for liquidation of the corporate debtor under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016, as the Committee of Creditors opted for liquidation over extending the Corporate Insolvency Resolution Process period. A Liquidator was appointed with directives for the liquidation process, marking the end of the Moratorium under Section 14 and the commencement of a new Moratorium under Section 33(5) of the IBC.

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Issues:
1. Application for liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016.
2. Constitution of Committee of Creditors (COC) and reconstitution with new financial creditors.
3. Invitation for Expression of Interest (EOI) and submission by prospective resolution applicants.
4. Valuation process hindered by lack of information from the board of directors.
5. Proposal for replacement of Resolution Professional (RP) and pending application.
6. Admission of missing documents and claims from financial creditors.
7. Decision on extension of Corporate Insolvency Resolution Process (CIRP) period.
8. Approval for sale of the corporate debtor as a going concern.
9. Application for liquidation due to non-approval of CIRP extension.
10. Appointment of Liquidator and directions for liquidation process.

Analysis:

1. The application filed by the Resolution Professional (RP) sought an order for the liquidation of the corporate debtor under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016. The Tribunal allowed the application, noting the decision of the Committee of Creditors (COC) not to seek an extension of the Corporate Insolvency Resolution Process (CIRP) period but to proceed with liquidation.

2. The RP constituted a Committee of Creditors (COC) in compliance with Section 18(1)(a) of the Code, comprising the sole financial creditor initially, which was later reconstituted to include a new financial creditor. The COC approved the appointment of the RP and verified and approved the claim of another financial creditor, leading to the reconstitution of the COC.

3. Following the submission of Expression of Interest (EOI) by prospective resolution applicants, it was found that none met the eligibility criteria. Subsequent publications for EOI with extended timelines were made due to non-fulfillment of requirements by the initial applicants.

4. The valuation process was impeded by the lack of information regarding fair value and liquidation value from the suspended board of directors, leading to a pending application under Section 19(2) of the Code.

5. A proposal for the replacement of the RP was made by a financial creditor, which led to a resolution by the COC for the replacement and a pending application before the NCLT, New Delhi Bench.

6. Missing documents were received from a financial creditor, and claims were admitted after verification, prompting the reconstitution of the COC with additional financial creditors.

7. The decision on the extension of the CIRP period was put forth for e-voting, seeking an extension beyond 180 days, which was disapproved by the COC, resulting in the application for liquidation.

8. The COC approved the sale of the corporate debtor as a going concern with a significant voting share, emphasizing the importance of exploring the possibility of selling the entity in the best interest of stakeholders.

9. Due to the non-approval of the CIRP extension, the RP informed the COC of the impending end of the CIRP period, necessitating the filing of an application for liquidation in accordance with Section 33(1)(a) of the IBC, 2016.

10. The Tribunal allowed the application for liquidation, appointing a Liquidator with specific directions for the liquidation process, including issuing a Public Announcement, investigating financial affairs, and submitting a Preliminary Report within the stipulated timeline. The Moratorium under Section 14 ceased to have effect, initiating a fresh Moratorium under Section 33(5) of the IBC.

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