2021 (7) TMI 497 - Tri - Insolvency and Bankruptcy

Tribunal orders liquidation of Corporate Debtor for failure to infuse funds as per Resolution Plan

The Tribunal ordered the liquidation of the Corporate Debtor due to the Resolution Applicant's failure to infuse funds as agreed in the approved ... Seeking Liquidation of Corporate Debtor - seeking to appoint the Resolution Professional as the Liquidator of the Corporate Debtor - Section 33 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It appears from the record that failure of the Resolution Applicant to infuse funds as proposed in the time line has contravened the provisions of the Resolution Plan approved by this Tribunal. From a reading of the Section 33(3) & (4) of the Insolvency and Bankruptcy Code, 2016, it is clear that if the Resolution Applicant fails to implement the Resolution plan within the timeframe as agreed, any person other than the Corporate Debtor can apply for Liquidation of the Corporate Debtor - In the present case, the Liquidation Value of the Corporate Debtor is ₹ 41,74,00,000 which is more than the upfront payment offered in the Resolution Plan i.e. ₹ 26,75,00,000 and that the Resolution Applicant has failed to honour his commitments in the Resolution Plan. The only course open to this Tribunal is to invoke Section 33(3) and (4) of the I & B Code, 2016 and order Liquidation of the Corporate Debtor. Shri Jasin jose, the proposed Liquidator has not filed the prescribed form accepting his appointment as Liquidator. Hence he has to be directed to produce the consent as per rules. M/s. Churakulam Tea Estate Private Limited is hereby put under liquidation with immediate effect under Section 33(1) of I & B Code, 2016 - Application allowed. Issues: Application for liquidation of Corporate Debtor due to failure to implement Resolution Plan and infuse funds as agreed.Analysis:1. The Application was filed under Section 33(3) of the I & B Code, 2016 by the Financial Creditor to order liquidation of the Corporate Debtor and appoint the Resolution Professional as the Liquidator.2. The Resolution Plan submitted by the Resolution Applicant was approved, but the Applicant failed to infuse funds as agreed, leading to a request for modification and extension of timelines in the Resolution Plan.3. The Monitoring Committee found that the Resolution Applicant failed to infuse funds as per the Plan, indicating financial inability to meet commitments, significantly prejudicing the interests of the Applicant.4. The Liquidation Value of the Company exceeded the amount offered in the Resolution Plan, justifying the maximization of stakeholder value through liquidation.5. The Tribunal noted the contravention of the Resolution Plan by the Resolution Applicant, emphasizing the importance of adhering to agreed timelines and commitments.6. Citing relevant provisions of the Insolvency and Bankruptcy Code, the Tribunal highlighted the right to apply for liquidation if the Resolution Plan is contravened, which was exercised by the Financial Creditor in this case.7. Considering the interests of stakeholders and the failure of the Resolution Applicant to honor commitments, the Tribunal invoked Section 33(3) and (4) to order the liquidation of the Corporate Debtor.8. The proposed Liquidator was directed to submit the prescribed form accepting the appointment to proceed with the liquidation process.9. Consequently, the Application was allowed, and the Corporate Debtor was placed under liquidation with immediate effect, appointing the former Resolution Professional as the Liquidator subject to submission of written consent within a week, with specific directions on discharging duties in accordance with the IBC, 2016.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision to order the liquidation of the Corporate Debtor based on the failure to implement the approved Resolution Plan.