Liquidation on failure of resolution plan follows CoC approval under insolvency law, triggering statutory liquidation proceedings

Where no resolution plan was received within the extended CIRP period and the Committee of Creditors approved liquidation with 100% voting share, the Adjudicating Authority was required to act on that statutory mandate and order liquidation under the Insolvency and Bankruptcy Code, 2016. The decision also resulted in appointment of a liquidator, issuance of public announcement, cessation of the earlier moratorium, and commencement of liquidation proceedings under the Code and the Liquidation Process Regulations.

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Issues: Whether liquidation of the corporate debtor was to be ordered under section 33(2) of the Insolvency and Bankruptcy Code, 2016 on the failure of any resolution plan and the approval of liquidation by the Committee of Creditors.

Analysis: The application was based on the admitted fact that the Corporate Insolvency Resolution Process had been initiated, the Committee of Creditors had been constituted, invitation for resolution plans had been issued and republished, but no resolution plan was ultimately received within the extended time. The Committee of Creditors thereafter approved liquidation with 100% voting share. In these circumstances, the statutory scheme required the Adjudicating Authority to give effect to the decision of the Committee of Creditors and order liquidation. Consequential directions were issued for appointment of the liquidator, public announcement, cessation of the earlier moratorium and commencement of liquidation proceedings in accordance with the Code and the Liquidation Process Regulations.

Conclusion: Liquidation of the corporate debtor was ordered and the application was allowed.

Final Conclusion: The corporate debtor was directed into liquidation, with the liquidator appointed and the liquidation process to proceed under the statutory framework of the Code and the applicable regulations.

Ratio Decidendi: Where no resolution plan is received and the Committee of Creditors approves liquidation with the requisite voting share, the Adjudicating Authority is to act in accordance with the statutory mandate and order liquidation under the Insolvency and Bankruptcy Code, 2016.

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