Corporate Debtor Company faces liquidation as Creditors vote unanimously under Insolvency & Bankruptcy Code The National Company Law Tribunal (NCLT), Hyderabad, ordered the liquidation of a Corporate Debtor Company due to the failure to receive a viable ...
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Corporate Debtor Company faces liquidation as Creditors vote unanimously under Insolvency & Bankruptcy Code
The National Company Law Tribunal (NCLT), Hyderabad, ordered the liquidation of a Corporate Debtor Company due to the failure to receive a viable resolution plan within the stipulated timeline. Despite offering a One Time Settlement (OTS) that was not fulfilled, the Committee of Creditors (CoC) unanimously voted for liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016. The Tribunal emphasized the binding nature of the CoC's decision and appointed the present Resolution Professional (RP) as the Liquidator, outlining the necessary steps for the liquidation process in accordance with the Code.
Issues: Application for liquidation under Section 33(1)(a) of the Insolvency and Bankruptcy Code, 2016.
Detailed Analysis:
1. Admission of Petition and Appointment of Resolution Professional: The National Company Law Tribunal (NCLT), Hyderabad, admitted the petition under Section 9 of the Code, initiating Corporate Insolvency Resolution Process (CIRP) of the Company. The Interim Resolution Professional (IRP) was appointed, and subsequently, the IRP was appointed as the Resolution Professional (RP) of the Corporate Debtor Company by the Committee of Creditors (CoC).
2. Extension of CIRP Period and Impact of COVID-19 Lockdown: Due to non-cooperation from the erstwhile Directors of the Corporate Debtor, there were delays in various processes, including publishing EoI and appointment of valuers. The CIRP period was extended by the Hon'ble Adjudicating Authority, but the COVID-19 lockdown further disrupted the proceedings, leading to delays in the resolution process.
3. Failure of Resolution Plan and Request for One Time Settlement (OTS): Despite efforts, no viable resolution plan was received by the stipulated date. The Corporate Debtor (CD) offered an OTS of Rs. 8 crores, but failed to meet the commitments within the agreed timelines, leading to the CoC's decision to recommend liquidation under Section 33(1)(a) of the IBC, 2016.
4. Legal Precedent and Liquidation Order: Citing legal precedent, the Tribunal emphasized that the CoC's decision with 100% voting share in favor of liquidation is binding. The Tribunal concluded that since no viable resolution plan was received, liquidation of the Company was the only option as per Section 33(1)(a) of the Code.
5. Order for Liquidation: The Tribunal ordered the liquidation of the Company as per the provisions of Chapter III of the Code. The present RP was appointed as the Liquidator, and various directions were issued regarding the liquidation process, including the cessation of moratorium, transfer of powers to the Liquidator, and cooperation from personnel connected with the Corporate Debtor.
6. Conclusion: The Tribunal's decision to allow the application for liquidation was based on the lack of viable resolution plans and the CoC's unanimous decision in favor of liquidation. The detailed order outlined the steps to be taken for the liquidation process, emphasizing compliance with the provisions of the Insolvency and Bankruptcy Code, 2016.
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