2021 (10) TMI 337 - Tri - Insolvency and Bankruptcy

Tribunal Approves Liquidation of Firestar Int'l Ltd under Insolvency Code

In Re : Ram Ratan Kanoongo, IRP and Ors.

The Tribunal approved the application for liquidation of Firestar International Limited under Section 33(1) of the Insolvency and Bankruptcy Code, 2016. ... Liquidation of Corporate Debtor - Section 33(1) read with Section 60 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The reasons assigned by the applicant in the application with respect to taking the decision of liquidation of the Corporate Debtor by the CoC appears to be genuine and convincing considering the financial conditions and assets of the company. It is observed from the minutes of the 2nd CoC meeting that the CoC has, with 93.31% majority, decided to liquidate the Corporate Debtor and relying on the settled principle of law regarding the Commercial Wisdom of the CoC, this Miscellaneous Application is allowed. The Corporate Debtor is ordered to be liquidated - application allowed. Issues:Liquidation of Firestar International Limited under Section 33(1) of the Insolvency and Bankruptcy Code, 2016.Analysis:The Resolution Professional filed an application seeking the liquidation of the Corporate Debtor under Section 33(1) of the Code. The application requested specific reliefs, including passing a liquidation order, appointing a liquidator, and directing cooperation with the liquidator. The background revealed that the Corporate Insolvency Resolution Process (CIRP) was initiated earlier, and the Committee of Creditors (CoC) had discussions regarding the resolution plan and liquidation. The CoC ultimately decided, with a significant majority, to proceed with the liquidation of the Corporate Debtor based on various factors such as lack of business prospects, insufficient assets, and unlikelihood of debt repayment through a resolution plan.The Tribunal carefully considered the application, documents submitted, and the reasoning behind the CoC's decision. The Tribunal found the CoC's decision to be genuine and convincing, especially given the financial condition and assets of the company. Relying on the principle of Commercial Wisdom of the CoC, the Tribunal allowed the application for liquidation. The Tribunal appointed a specific liquidator, outlined the liquidation process to be followed, and granted the liquidator powers equivalent to the board of directors and key managerial personnel of the Corporate Debtor. Additionally, the Tribunal directed the Corporate Debtor's personnel to cooperate with the liquidator and imposed restrictions on legal proceedings against the Corporate Debtor once the liquidation process commenced.In conclusion, the Tribunal approved the application for liquidation, appointed a liquidator, and provided detailed directions for the liquidation process in accordance with the Insolvency and Bankruptcy Code, 2016. The decision highlighted the importance of the CoC's decision-making process and the need to follow established regulations and procedures for the orderly conduct of the liquidation process.