2021 (10) TMI 80 - Tri - Insolvency and Bankruptcy

Application for Liquidation Rejected under Insolvency Code Section 33(1): Penalties Imposed for Non-Compliance

The Adjudicating Authority rejected the application for liquidation under Section 33(1) of the Insolvency and Bankruptcy Code due to non-satisfaction of ... Liquidation of the corporate debtor - Section 33 (1) of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In the present case no approval of the CoC has been obtained with respect to filing of this application, rather it has been observed that neither the sole CoC member i.e. the Operational Creditor nor the RP of the Operational Creditor has come forward or appeared before the Adjudicating Authority to move forward with the CIR process of the Corporate Debtor. Further it has been observed that no progress has been made in the CIRP of the Corporate Debtor and neither the Operational Creditor nor the RP of the Operational Creditor is pressing for the CIRP. Even the alleged assignee of the debt of the Operational Creditor, M/s. Terrence Alloys Pvt. Ltd. has not come forward after the rejection of the application for assignment of debt. This bench thinks fit that no orders under Section 33(1) of the code can be passed because none of the criteria for passing the order under Section 33(1) are satisfied hence, this application stands Rejected - Application dismissed. Issues:1. Application for order of liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016.2. Doubtful assignment of debt by the Operational Creditor.3. Non-cooperation by the Resolution Professional (RP) of the Operational Creditor leading to failure to hold the 2nd meeting of the Committee of Creditors (CoC).4. Decision on liquidation based on Section 33(1) criteria.Analysis:1. The application was filed for the liquidation of the Corporate Debtor under Section 33(1) of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority examined the case to determine whether the criteria for liquidation were met. The Adjudicating Authority must be satisfied that no resolution plan was received within the stipulated period or that a resolution plan was rejected for non-compliance with requirements specified in Section 31.2. An application was filed under Section 60(5) of the IBC regarding the doubtful assignment of debt by the Operational Creditor. The Adjudicating Authority observed internal transactions without legal implication and directed penalties on the Operational Creditor and the assignee of debt. The rejection of the assignment impacted the CoC meetings and subsequent proceedings.3. The RP of the Operational Creditor's non-cooperation led to the failure to hold the rescheduled 2nd CoC meeting. The RP cited prior orders and assignment issues as reasons for non-attendance. Correspondences highlighted disagreements on the RP's role and obligations, affecting the progress of the CIRP.4. The Adjudicating Authority, after considering the facts and lack of progress in the CIRP, rejected the application for liquidation. The absence of audited accounts, non-cooperation by involved parties, and failure to meet Section 33(1) criteria led to the rejection. Penalties were imposed on the Operational Creditor, RP of the Corporate Debtor, and the alleged assignee of debt for non-compliance.In conclusion, the Adjudicating Authority rejected the application for liquidation under Section 33(1) due to non-satisfaction of criteria and lack of progress in the CIRP. Penalties were imposed on relevant parties for non-cooperation and non-compliance. The decision aimed to address the issues of doubtful debt assignment, non-cooperation, and lack of progress in the resolution process.