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Corporate Debtor Liquidation Application Approved under Insolvency Code The Tribunal approved the application for the liquidation of the Corporate Debtor under sections 33 & 34 of the Insolvency and Bankruptcy Code, 2016. ...
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Corporate Debtor Liquidation Application Approved under Insolvency Code
The Tribunal approved the application for the liquidation of the Corporate Debtor under sections 33 & 34 of the Insolvency and Bankruptcy Code, 2016. The Committee of Creditors' decision to opt for liquidation due to the lack of viable Resolution Plans and significant assets was upheld. The Tribunal lifted the moratorium, appointed the Resolution Professional as the Liquidator, and outlined the powers and duties of the Liquidator. Legal proceedings against the Corporate Debtor were restricted, except those initiated by the Liquidator with prior approval. The application for liquidation was granted, resolving the matter.
Issues: Liquidation of Corporate Debtor under sections 33 & 34 of the Insolvency and Bankruptcy Code, 2016.
Analysis: The Applicant, acting as the Resolution Professional (RP), filed an application for the liquidation of the Corporate Debtor under sections 33 & 34 of the Insolvency and Bankruptcy Code, 2016, and for the appointment of a Liquidator. The Corporate Debtor, initially facing a Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IB Code, had no viable Resolution Plan and lacked significant assets, leading the Committee of Creditors (CoC) to decide on liquidation during their Fourth Meeting. The CoC's commercial wisdom in opting for liquidation was upheld, emphasizing that the Adjudicating Authority cannot interfere in such decisions as per legal precedents.
The Tribunal, after considering the lack of viable Resolution Plans, the absence of significant assets, and the CoC's decision for liquidation, issued various orders. The moratorium under Section 14 of the IB Code was lifted upon the liquidation order, and the Liquidator was instructed to make a public announcement regarding the liquidation. Additionally, the Liquidator was mandated to notify the relevant authority about the liquidation, and legal proceedings against the Corporate Debtor were restricted, except those initiated by the Liquidator with prior approval. The Tribunal clarified that certain legal proceedings exempted by the Central Government would not be affected.
Furthermore, the Tribunal outlined the transfer of powers from the Board of Directors to the Company Liquidator, detailing the duties and powers the Liquidator would assume as per the IB Code and related regulations. Employees were directed to cooperate with the Liquidator, and the Liquidator was authorized to charge fees proportional to the value of the liquidation estate assets. The Registry was tasked with communicating the order to the relevant entities promptly.
Conclusively, the Tribunal allowed the application for liquidation of the Corporate Debtor, appointing the RP as the Liquidator for the process. The application was granted, and the matter was resolved accordingly.
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