Liquidation under the Insolvency and Bankruptcy Code includes efforts to sell the business as a going concern

Liquidation under the Insolvency and Bankruptcy Code, 2016 was approved after the resolution plan process failed and the committee of creditors sanctioned liquidation. The resolution professional was appointed as liquidator, with directions to comply with the liquidation framework, issue the required public announcement, secure cooperation from personnel, and take charge of the corporate debtor's affairs after cessation of the moratorium. The liquidator was also directed to endeavour to sell the business as a going concern during liquidation, with ordinary liquidation distribution to follow if such sale did not materialise within the stipulated period. Employee discharge was made subject to continuation of business as a going concern.

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Issues: Whether the corporate debtor should be ordered into liquidation, and whether the liquidator should endeavour to sell the business as a going concern during liquidation.

Analysis: The application for liquidation was allowed after the resolution plan process had failed and the committee of creditors had approved liquidation. The order directed liquidation under Chapter III of the Insolvency and Bankruptcy Code, 2016, appointed the resolution professional as liquidator, and required compliance with the liquidation framework. The liquidator was also directed to make efforts to sell the company as a going concern in terms of the liquidation regulations, with a fallback to the ordinary liquidation waterfall if such sale did not materialise within the stipulated period. Consequential directions were issued regarding cessation of the moratorium, vesting of powers in the liquidator, public announcement, cooperation by personnel, and discharge of employees subject to continuation of business as a going concern.

Conclusion: Liquidation was ordered, the liquidator was appointed, and a going concern sale was directed to be pursued during liquidation.

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