2021 (5) TMI 942 - Tri - Insolvency and Bankruptcy

Denial of CIRP Extension Leads to Liquidation: New Liquidator Appointed with Specific Responsibilities

The application for extension of the Corporate Insolvency Resolution Process (CIRP) period was denied, leading to the initiation of liquidation ... Seeking extension of time period of the CIRP of the Corporate Debtor by a period of 90 days effective 30.03.2020 - sections 12 and 60 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- As per the facts of the present case, there is no resolution for Liquidation of the Corporate Debtor. As per section 33(1) of the IBC, 2016 which contemplates that if the maximum period permitted for completion of the CIRP has expired then this Tribunal has to order for the liquidation of the Corporate Debtor. Since this Tribunal has not granted the extension of the CIRP beyond the stipulated period of 180 days, as per operation of Section 33(1) of the IBC, 2016, the Corporate Debtor should be ordered for liquidation. Section 33(1) of the IBC, 2016. The Resolution Professional expressed his willingness to continue as the liquidator and also a perusal of the same discloses the fact that the Resolution Professional is willing to act as the Liquidator of the Corporate Debtor, if appointed by this Tribunal. The Liquidator shall strictly act in accordance with the provisions of IBC, 2016 and the attendant Rules and regulations including Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 as amended upto date enjoined upon him - Application disposed off. Issues:Application for extension of Corporate Insolvency Resolution Process (CIRP) under sections 12 and 60 of the Insolvency and Bankruptcy Code, 2016.Detailed Analysis:1. Extension of CIRP Period:The Resolution Professional filed an application seeking an extension of the CIRP period for the Corporate Debtor by 90 days, as approved by the Committee of Creditors (COC) in a meeting held on 09.03.2020. The application was filed before the CIRP period was set to expire on 31.03.2020.2. Legal Proceedings:The matter was brought before the Adjudicating Authority, with subsequent hearings scheduled due to time constraints. The Applicant was directed to file an additional Affidavit detailing the sequence of events. It was highlighted that no resolution plan was pending for approval, and as the 330-day CIRP period had lapsed without progress towards resolution, the matter of liquidation was raised.3. Liquidation Order:As per Section 33(1) of the IBC, 2016, if the maximum period for CIRP completion expires without a resolution plan, the Adjudicating Authority must order liquidation. Since the Tribunal did not grant an extension beyond the 180-day period, liquidation was deemed necessary. The Resolution Professional expressed willingness to act as the Liquidator.4. Appointment of Liquidator:A new Liquidator was appointed to oversee the liquidation process, subject to specific terms and directions. The Liquidator was instructed to adhere strictly to IBC provisions, issue public announcements, investigate financial affairs, and comply with regulatory requirements, among other responsibilities.5. Liquidation Process:The Liquidator was directed to proceed with liquidation as per the IBC guidelines, investigate financial affairs, submit reports within specified timelines, and communicate with relevant authorities. The order of Moratorium under Section 14 ceased, and a fresh Moratorium under Section 33(5) commenced.6. Conclusion:The application for extension of the CIRP period was disposed of with the appointment of a Liquidator and detailed instructions for the liquidation process. The order was communicated to financial creditors, the Corporate Debtor, and the Liquidator for necessary actions and cooperation in the liquidation process.This detailed analysis outlines the key aspects and outcomes of the judgment regarding the application for extension of the CIRP period and subsequent liquidation proceedings for the Corporate Debtor as per the provisions of the Insolvency and Bankruptcy Code, 2016.