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Tribunal Orders Liquidation of Company under Insolvency Code - Creditors Unanimously Approve The Tribunal allowed the application for liquidation of the Corporate Debtor under Sections 33(1)(a) and 34(1) of the Insolvency and Bankruptcy Code, ...
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Tribunal Orders Liquidation of Company under Insolvency Code - Creditors Unanimously Approve
The Tribunal allowed the application for liquidation of the Corporate Debtor under Sections 33(1)(a) and 34(1) of the Insolvency and Bankruptcy Code, 2016. The Committee of Creditors unanimously decided to liquidate the company due to its inactivity and lack of interest from potential resolution applicants. The Tribunal appointed a Liquidator, granted necessary powers, and issued directions for the liquidation process, including a public notice and restrictions on legal proceedings against the Corporate Debtor without the Liquidator's approval. The order of liquidation discharged the Corporate Debtor's officers, employees, and workmen, except for ongoing business operations managed by the Liquidator.
Issues: Liquidation of Corporate Debtor under Sections 33(1)(a) and 34(1) of the Insolvency and Bankruptcy Code, 2016.
Issue 1: Liquidation Application and Relief sought The Resolution Professional filed an application seeking liquidation of the Corporate Debtor under Sections 33(1)(a) and 34(1) of the Insolvency and Bankruptcy Code, 2016. The application requested various reliefs, including an order for liquidation, direction to release a specific amount to the applicant, and any other suitable directions. The Resolution Professional highlighted the history of the case, starting from the admission of the petition under Sections 8 & 9 of the Code, the formation of the Committee of Creditors (CoC), and the decision to liquidate the company due to its inactivity and lack of interest from prospective resolution applicants. The Resolution Professional expressed inability to act as the Liquidator for the Corporate Debtor.
Issue 2: Decision on Liquidation During the 3rd meeting of the CoC, it was unanimously resolved to liquidate the Corporate Debtor. The CoC's decision was based on the absence of operations and employees, coupled with the lack of interest from potential resolution applicants. The Resolution Professional was directed to file a miscellaneous application seeking further directions and orders under Sections 33(1)(a) and 34(1) of the Code. The CoC's decision to liquidate the Corporate Debtor was supported by all members with a 100% majority vote. Consequently, the Tribunal acknowledged the CoC's commercial wisdom in deciding to liquidate the Corporate Debtor and allowed the Interlocutory Application.
Issue 3: Tribunal's Directions on Liquidation After considering the application and relevant documents, the Tribunal made several key observations and directions. It appointed a specific Liquidator as provided under Section 34(1) of the Code. The Liquidator was authorized to conduct the liquidation proceedings and entitled to fees as per the regulations. The Tribunal instructed the Liquidator to follow the liquidation process regulations and exercise all powers of the board of directors, key managerial personnel, and partners of the Corporate Debtor. Additionally, the Tribunal directed the issuance of a public notice for the Corporate Debtor's liquidation and emphasized cooperation from the Corporate Debtor's personnel. Legal proceedings against the Corporate Debtor were restricted, except with the Liquidator's approval. The order of liquidation served as a discharge notice to the Corporate Debtor's officers, employees, and workmen, except for ongoing business operations managed by the Liquidator.
In conclusion, the Tribunal allowed and disposed of the application for liquidation, appointing a Liquidator and providing detailed directions for the liquidation process in accordance with the Insolvency and Bankruptcy Code, 2016.
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