2021 (10) TMI 1037 - Tri - Insolvency and Bankruptcy

KK Milk Fresh India Ltd. Faces Liquidation as Resolution Plan Fails

The Tribunal approved the application for liquidation of the Corporate Debtor, KK Milk Fresh India Ltd., under Section 33(1) of the Insolvency and ... Liquidation upon expiry of CIRP period in absence of an approved resolution plan - Commercial wisdom of the Committee of Creditors - Appointment of Liquidator under Section 34(1) of the Code - Liquidator's duty to issue public announcement and to conduct liquidation process - Discharge of officers, employees and workmen on commencement of liquidation - Ceasing of CIRP moratorium and commencement of liquidation moratorium under Section 33(5)Liquidation upon expiry of CIRP period in absence of an approved resolution plan - Commercial wisdom of the Committee of Creditors - Corporate Debtor ordered to be liquidated as CIRP period expired without any IBC compliant resolution plan and the CoC, in its commercial wisdom, resolved liquidation. - HELD THAT: - The Tribunal found that despite publicity, invitation of EOIs, issuance of RFRP and multiple opportunities, no resolution plan was received or approved before the end of the CIRP period. The Committee of Creditors, after deliberations and having regard to the elapsed CIRP timeline and absence of any viable plan, unanimously advised the Resolution Professional to move for liquidation. The Adjudicating Authority declined to interfere with the commercial decision of the CoC and held that the endeavours to obtain a resolution had failed, warranting liquidation of the corporate debtor. [Paras 11, 12]KK Milk Fresh India Ltd. is ordered to be liquidated with effect from the date of the order.Appointment of Liquidator under Section 34(1) of the Code - The Resolution Professional, who conducted the CIRP, is appointed as Liquidator upon his consent in the prescribed form. - HELD THAT: - The Committee of Creditors confirmed the incumbent Resolution Professional as liquidator and the RP gave consent in the prescribed form. On that basis the Tribunal appointed the same person as Liquidator in terms of the Code, thereby effecting the statutory requirement for appointment of a liquidator when liquidation is ordered. [Paras 13]Chanchal Dua is appointed as Liquidator in terms of Section 34(1) of the Code.Liquidator's duty to issue public announcement and to conduct liquidation process - Discharge of officers, employees and workmen on commencement of liquidation - Ceasing of CIRP moratorium and commencement of liquidation moratorium under Section 33(5) - Directions issued to the Liquidator regarding public announcement, conduct of liquidation, deemed discharge of personnel, submission of preliminary report, and effect on moratorium. - HELD THAT: - The Tribunal directed the Liquidator to issue a public announcement of liquidation and to carry out the liquidation in accordance with the Code and the Insolvency and Bankruptcy (Liquidation Process) Regulations. The order is treated as notice of discharge to officers, employees and workmen as provided by the Code. The Liquidator was mandated to submit a preliminary report to the Adjudicating Authority within seventy five days from the liquidation commencement date. Consequentially, the moratorium under Section 14 ceases and a fresh moratorium under Section 33(5) commences upon liquidation. [Paras 13, 14]Liquidator to issue public announcement, proceed with liquidation as per law, treat the order as discharge notice to personnel, submit a preliminary report within seventy five days, and the CIRP moratorium ceded to the liquidation moratorium.Final Conclusion: The Tribunal allowed the application under Section 33(1) of the Code, ordered liquidation of KK Milk Fresh India Ltd. on account of failure to secure an approved resolution plan within the CIRP period, appointed the incumbent Resolution Professional as Liquidator, and issued consequential directions governing the liquidation process and moratorium. Issues: Application for liquidation of Corporate Debtor under Section 33(1) of the Insolvency and Bankruptcy Code, 2016.Detailed Analysis:1. The Resolution Professional (RP) filed an application under Section 33(1) of the Insolvency and Bankruptcy Code, 2016, seeking directions for the liquidation of the Corporate Debtor, KK Milk Fresh India Ltd., and the appointment of a Liquidator.2. The application was admitted for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of IBC, 2016, with Mr. Swami Deen Gupta appointed as the Interim Resolution Professional.3. Despite efforts, the necessary information about the Corporate Debtor was not available due to non-cooperation from ex-directors, leading to the replacement of the IRP with a new RP, Mr. Chanchal Dua, approved by the Tribunal.4. The RP invited Expressions of Interest (EOI) for submission of Resolution Plans, with multiple meetings held to discuss the process, including the valuation of assets and the submission deadline for Resolution Plans.5. The RP informed the CoC that no Resolution Plans were received within the stipulated timelines, prompting discussions in the CoC meetings regarding the liquidation of the Corporate Debtor due to the expiry of the CIRP period without any viable alternatives.6. The CoC unanimously advised the RP to file an application for liquidation of the Corporate Debtor, as no Resolution Plan was received, leading to the decision to appoint the RP as the Liquidator in accordance with the provisions of the IBC.7. The Tribunal acknowledged the CoC's decision to liquidate the Corporate Debtor as appropriate, considering the failed attempts to obtain a resolution, and ordered the liquidation of KK Milk Fresh India Ltd. with the RP appointed as the Liquidator.8. Directions were given for the Liquidator to issue a public announcement, proceed with the liquidation process, submit a Preliminary Report, and notify the concerned parties about the discharge of officers, employees, and workmen of the Corporate Debtor.9. The order also specified the cessation of the Moratorium under Section 14 of IBC, 2016, and the commencement of a fresh Moratorium under Section 33(5) of the Code, with copies of the order to be communicated to relevant stakeholders and authorities for necessary actions and records update.This judgment reflects a comprehensive analysis of the application for liquidation of a Corporate Debtor under the Insolvency and Bankruptcy Code, detailing the procedural steps, CoC decisions, RP actions, and Tribunal's order for liquidation and appointment of a Liquidator.