2021 (3) TMI 920 - Tri - Insolvency and Bankruptcy

Court orders liquidation of Corporate Debtor under Insolvency and Bankruptcy Code

Punjab National Bank Versus Atlas Alloy (India) Pvt. Ltd.

The court directed the liquidation of the Corporate Debtor under Sections 33 and 34 of the Insolvency and Bankruptcy Code, 2016, due to the absence of any ... Liquidation of Corporate Debtor - Section 33 of IBC, 2016 - Prescribed period for filing application - Appointment of Liquidator and fee to be paid - liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) - HELD THAT:- In the present case, the application under Section 7 of the Code was admitted on 20.09.2019 and the present application was filed by the RP on 19.05.2020. Accordingly, the date for completion of CIRP was 18.03.2020. It is noted that the CoC with 100% voting resolved to liquidate the Corporate Debtor in the 5th meeting of CoC dated 17.03.2020 - As per Notification No. IBBI/2020-21/GN/REG059 dated 20.04.2020, the period of Lockdown is excluded for the purpose of calculating the timelines in CIR Process. Hence, after considering exclusion of lockdown period till 31.05.2020, the present application is filed within the prescribed period. In view thereof the Application under consideration is taken up under Section 33 (2). Appointment of Liquidator and fee to be paid - HELD THAT:- Section 34(1) of the Code provides that where the Adjudicating Authority passes an order for liquidation of the Corporate Debtor under Section 33, the resolution professional appointed for the corporate insolvency resolution process shall, subject to submission of written consent, act as the Liquidator for the purpose of liquidation - The present RP Mr. Satyendra Prasad Khorania is eligible to be appointed as Liquidator. The CoC had also resolved to appoint the RP as Liquidator in the 5th meeting of CoC - Mr. Satyendra Prasad Khorania is appointed as Liquidator. Liquidation Cost (Regulation 39B of CIRP Regulations, 2016) - HELD THAT:- It is noted that the CoC in its 5th meeting has not decided the estimated liquidation cost and discussed that the liquidation cost will be taken on actual basis which will be approved by the Stakeholders committee formed during the liquidation of the Corporate Debtor. The Liquidator is, therefore, directed to take necessary action under Regulation 2A of the IBBI (Liquidation Process) Regulations, 2016 regarding contributions to liquidation costs. Assessment of Sale as a going concern (Regulation 39C of CIRP Regulations, 2016) - HELD THAT:- The CoC in its 5th meeting has unanimously resolved to sell the Corporate Debtor as a going concern, as first option, or sell the business(s) of the Corporate Debtor as a going concern, as second option, before exploring other options as per Regulations 32 & 32A of IBBI (Liquidation Process) Regulations, 2016 and Regulation 39C of CIRP Regulations, if an order of liquidation is passed by the Adjudicating Authority. Fees of the Liquidator (Regulation 39D of CIRP Regulations, 2016) - HELD THAT:- The remuneration of the Liquidator would be fixed to be ₹ 50,000 per month until winding up of the Corporate Debtor. In view of the satisfaction of the conditions provided under Section 33(2) of the Code, the Corporate Debtor, Atlas Alloy (India) Pvt. Ltd. is directed to be liquidated in the manner as laid down in Chapter III of the Code - Application allowed. Issues Involved:1. Initiation of liquidation proceedings under Section 33 and 34 of the Insolvency and Bankruptcy Code (IBC), 2016.2. Compliance with procedural requirements and timelines.3. Appointment and role of the Liquidator.4. Liquidation costs, sale as a going concern, and fees of the Liquidator.5. Pending applications and their impact on liquidation proceedings.Detailed Analysis:1. Initiation of Liquidation Proceedings:The application IA No. 131/JPR/2020 was filed by the Resolution Professional (RP) for initiating liquidation proceedings against the Corporate Debtor under Sections 33 and 34 of the IBC, 2016. The application was filed due to the absence of any resolution plan received during the Corporate Insolvency Resolution Process (CIRP). The Tribunal observed that the directors of the Corporate Debtor had no role in the CIRP, making their inclusion irrelevant.2. Compliance with Procedural Requirements and Timelines:The application under Section 7 of the Code was admitted on 20.09.2019, and the CIRP was to be completed by 18.03.2020. Despite multiple invitations for Expressions of Interest (EOI), no resolution plan was received. The CoC resolved to liquidate the Corporate Debtor in its 5th meeting on 17.03.2020. The application for liquidation was filed within the prescribed period, considering the exclusion of the lockdown period due to COVID-19 as per the Supreme Court's order dated 23.03.2020 and IBBI Notification dated 20.04.2020.3. Appointment and Role of the Liquidator:Section 34(1) of the IBC mandates that the RP shall act as the Liquidator upon submission of written consent. The CoC resolved to appoint Mr. Satyendra Prasad Khorania as the Liquidator, and he provided his written consent. His credentials were verified, and no adverse findings were noted. Thus, Mr. Khorania was appointed as the Liquidator.4. Liquidation Costs, Sale as a Going Concern, and Fees of the Liquidator:- Liquidation Costs: The CoC did not decide on the estimated liquidation cost but resolved that it would be approved by the Stakeholders Committee during liquidation.- Sale as a Going Concern: The CoC resolved to sell the Corporate Debtor as a going concern as the first option, or its business as a going concern as the second option, before exploring other options.- Fees of the Liquidator: The CoC resolved on the Liquidator's fees, stipulating that it would be the same as the RP's fee for certain periods and fixed at Rs. 50,000 per month if the secured financial creditor did not relinquish its security interest.5. Pending Applications and Their Impact:- IA No. 424/JPR/2019: Filed under Section 19(2) of the Code to direct the suspended directors and statutory auditor to cooperate with the RP. It was directed to be listed with the main case.- IA No. 93/JPR/2020: Filed by the erstwhile director challenging the CIRP order, which became infructuous after the NCLAT dismissed the appeal.- IA Nos. 112/JPR/2020, 120/JPR/2020, and 141/JPR/2020: Filed to report minutes of CoC meetings, which were considered in the proceedings and disposed of.Conclusion:The Corporate Debtor is directed to be liquidated as per Chapter III of the IBC, 2016. The Liquidator is to take necessary actions, including publishing a public announcement, filing preliminary and progress reports, and managing the affairs of the Corporate Debtor. Pending applications were addressed, and relevant directions were issued for their disposal.