Liquidation under insolvency law follows when no resolution plan emerges and creditors resolve to liquidate, with lockdown time excluded.
Where no resolution plan was received during the CIRP and the committee of creditors unanimously resolved to liquidate, the text states that liquidation under the Insolvency and Bankruptcy Code was appropriate. It also notes that the COVID-19 lockdown period was excluded for timeline computation, so the liquidation application remained within time. On appointment, the resolution professional is ordinarily appointed as liquidator under section 34, subject to eligibility, written consent, and creditor approval. The text further refers to standard liquidation directions, including public announcement, reporting requirements, moratorium-like restrictions, and disposal of pending or infructuous applications.
Issues: (i) whether the corporate debtor was liable to be placed in liquidation under the Insolvency and Bankruptcy Code, 2016 on account of failure to receive any resolution plan within the CIRP period and the CoC resolution to liquidate, including the effect of the COVID-19 lockdown exclusion; (ii) whether the resolution professional was required to be appointed as liquidator and ancillary directions relating to liquidation were warranted.
Issue (i): whether the corporate debtor was liable to be placed in liquidation under the Insolvency and Bankruptcy Code, 2016 on account of failure to receive any resolution plan within the CIRP period and the CoC resolution to liquidate, including the effect of the COVID-19 lockdown exclusion.
Analysis: No resolution plan was received despite publication inviting expression of interest, and the committee of creditors unanimously resolved to liquidate the corporate debtor before the expiry of the CIRP period. The application for liquidation was filed after the onset of the pandemic, and the period of lockdown was excluded for computation of timelines in view of the binding extension of limitation and the applicable liquidation process regulation, making the application maintainable within time.
Conclusion: The requirement for liquidation under section 33 stood satisfied and the corporate debtor was directed to be liquidated.
Issue (ii): whether the resolution professional was required to be appointed as liquidator and ancillary directions relating to liquidation were warranted.
Analysis: Under section 34, the resolution professional appointed in the CIRP ordinarily acts as liquidator subject to written consent, and the record showed his eligibility, consent, and approval by the committee of creditors. The order also dealt with the consequences of liquidation, including moratorium-like restrictions, public announcement, filing of reports, and treatment of pending and infructuous applications.
Conclusion: The resolution professional was appointed as liquidator and the connected liquidation directions were issued.
Final Conclusion: The proceeding culminated in liquidation of the corporate debtor with appointment of the resolution professional as liquidator and disposal of the connected applications.
Ratio Decidendi: Where no resolution plan is received within the CIRP period and the committee of creditors resolves to liquidate, the adjudicating authority must order liquidation and appoint the eligible resolution professional as liquidator in accordance with the Code and the applicable regulations.
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