Going-concern sale in liquidation can include equity settlement and purchaser protection, but fiscal exemptions need competent authority approval.

Where a corporate debtor is sold as a going concern in liquidation, the Tribunal may ? approve consequential reliefs needed to implement the acquisition, including equity-based settlement of consideration, cancellation of existing share capital, delisting, and limited regulatory relaxation to effect change in control. The purchaser may also be protected from past liabilities, claims, proceedings, guarantees and pre-transfer non-compliances, while the corporate debtor's recovery rights against third parties are preserved. However, blanket tax and fiscal exemptions, including carry forward of losses and recognition of the bid as a resolution plan, were not granted and were left to the competent authorities.

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Issues: (i) Whether the corporate debtor could be sold as a going concern with the sale consideration adjusted through equity issuance and with consequential cancellation of existing share capital and delisting of shares; (ii) whether relief could be granted insulating the purchaser from past liabilities, claims, proceedings and non-compliances while preserving the right to recover amounts due to the corporate debtor; (iii) whether the tax-related and regulatory exemptions sought, including carry forward of losses and treatment of the bid as a resolution plan, could be granted by the Tribunal or should be left to the competent authorities.

Issue (i): Whether the corporate debtor could be sold as a going concern with the sale consideration adjusted through equity issuance and with consequential cancellation of existing share capital and delisting of shares.

Analysis: The liquidation sale was undertaken as a going concern under the liquidation framework, and the Tribunal treated the proposed acquisition as one intended to preserve the business as a continuing entity. In that setting, permission was granted to satisfy the sale consideration by investment into equity, followed by issuance of shares to the successful bidder, cancellation of existing shares, and delisting. The connected SEBI compliance requirements were also relaxed to the extent necessary to give effect to the acquisition and change in control.

Conclusion: The relief on equity issuance, cancellation of existing share capital, delisting and SEBI exemptions was allowed in favour of the applicant.

Issue (ii): Whether relief could be granted insulating the purchaser from past liabilities, claims, proceedings and non-compliances while preserving the right to recover amounts due to the corporate debtor.

Analysis: Since the sale was of the corporate debtor as a going concern in liquidation, the Tribunal proceeded on the basis that the purchaser should receive the business free from past encumbrances and that liquidation proceeds would be distributed under the statutory waterfall. On that basis, the purchaser was protected from liabilities, guarantees, pending proceedings and pre-transfer non-compliances, while the corporate debtor's right to recover amounts from third parties was preserved.

Conclusion: The protection against past liabilities and proceedings, together with preservation of recovery rights, was granted in favour of the applicant.

Issue (iii): Whether the tax-related and regulatory exemptions sought, including carry forward of losses and treatment of the bid as a resolution plan, could be granted by the Tribunal or should be left to the competent authorities.

Analysis: For the tax consequences and certain statutory exemptions, the Tribunal declined to grant blanket relief and indicated that the applicant should approach the competent authorities. The request to treat the bid as a resolution plan under the Income-tax Act was also not granted as an adjudicatory declaration by the Tribunal. The applicant was, however, left to seek consideration of such requests before the appropriate forum.

Conclusion: The tax-related blanket exemptions were not granted by the Tribunal and were left for consideration by the competent authorities.

Final Conclusion: The application succeeded substantially on the liquidation-sale consequences and purchaser protection, but the wider tax exemption and certain allied fiscal reliefs were not adjudicated in the applicant's favour and were relegated to the appropriate authorities.

Ratio Decidendi: Where a corporate debtor is sold as a going concern in liquidation, the Tribunal may approve consequential reliefs necessary to give effect to the acquisition and protect the purchaser from antecedent liabilities, while fiscal exemptions beyond the liquidation framework require consideration by the competent statutory authorities.

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