2021 (10) TMI 1033 - Tri - Insolvency and Bankruptcy

Extension granted for liquidation process due to pending avoidances, unsold assets, and former Directors' issues.

The Tribunal granted the Liquidator's application for an extension of time for the liquidation process by one year, excluding the lockdown period. The ... Extension of liquidation period - powers under section 35(1)(n) of the Insolvency and Bankruptcy Code, 2016 - effect of national lockdown on liquidation timelines - pending avoidance applications and completion of liquidation - compliance with model timelines under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016Extension of liquidation period - effect of national lockdown on liquidation timelines - pending avoidance applications and completion of liquidation - compliance with model timelines under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Grant of extension of the liquidation period for the Corporate Debtor and directions governing completion of the liquidation process. - HELD THAT: - The Liquidator, appointed pursuant to the order dated 27.08.2019, sought an extension of the liquidation period on account of delays including failed e-auctions caused by the national lockdown and the pendency of avoidance proceedings filed by the Liquidator. The Tribunal noted that liquidation was required to be completed on or before 27.08.2020 but that assets remained unsold and avoidance applications remained undetermined, preventing completion of the liquidation process. In light of these circumstances and the disruptions caused by the lockdown, the Tribunal considered it just and proper to grant an extension. The Tribunal extended the liquidation period for a further period of one year and directed the Liquidator to endeavour to complete the process within the extended period, to comply with the model timelines prescribed under the Liquidation Process Regulations, 2016, and to file the requisite reports with the Tribunal. The Tribunal also recorded that no further extension should be sought and required the Liquidator to proceed with handing over assets sold to successful bidders and pursue pending proceedings necessary for completion of liquidation. [Paras 6, 7]IA/659/CHE/2021 is allowed; the liquidation period is extended for one year and the Liquidator is directed to complete the liquidation on or before 20.12.2021 while complying with the IBBI model timelines.Final Conclusion: The application for extension is allowed: the liquidation period of the Corporate Debtor is extended for one year, to be completed on or before 20.12.2021, subject to compliance with the Liquidation Process Regulations and the Tribunal's directions. Issues: Liquidator seeking extension of time for liquidation process.The judgment pertains to an application filed by the Liquidator under section 35(1)(n) of the Insolvency and Bankruptcy Code, 2016 seeking an extension of time to continue the liquidation process. The Liquidator had been appointed following a Tribunal order in August 2019 and had undertaken various steps in the liquidation process, including receiving claims from creditors, appointing valuers, and attempting to auction the Corporate Debtor's assets. However, due to the national lockdown, the e-auction of immovable properties was canceled, leading to delays in the process. Additionally, legal proceedings against the former Directors and issues related to a bank lien further complicated the situation. The Liquidator requested an extension of the liquidation period by one year, excluding the lockdown period, to complete the process effectively.The Tribunal considered the facts presented and noted that the avoidance applications filed by the Liquidator were pending adjudication, and the assets of the Corporate Debtor were yet to be sold. In light of these circumstances, the Tribunal deemed it appropriate to grant an extension of the liquidation period for one year, setting a new deadline for the completion of the process. The Liquidator was directed to make every effort to finalize the liquidation within the extended period and adhere to the prescribed timelines and regulations. The Tribunal emphasized the importance of timely completion and instructed the Liquidator not to seek any further extensions beyond the granted period. Ultimately, the Tribunal allowed the application for extension of time for the liquidation process, providing clear directives for the Liquidator to follow in ensuring the efficient conclusion of the proceedings.