2021 (11) TMI 22 - Tri - Insolvency and Bankruptcy

Tribunal Approves Liquidation for Corporate Guarantors: Resolution Professional Appointed as Liquidator

Vikas Prakash Gupta, RP of Utility Agrotech Industries Private Limited and Ors. Versus Suspended Directors of the Corporate Debtor and Ors.

The Tribunal approved the liquidation process for the Corporate Guarantors due to their lack of viable assets. The Resolution Professional was appointed ... Seeking Liquidation of Corporate Guarantors - Section 33(1), 33(2) & 34 of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- An order of liquidation can be passed in the present case as there are insignificant financial and tangible assets in the Corporate Guarantor, hence, there is no chance of resolution of the Corporate Guarantor of the Corporate Debtor. The CoC has passed resolution in terms of provisions of Regulation 39C of CIRP Regulations as well as Regulation 32, 32A of Liquidation Process Regulations to the effect that Corporate Guarantor cannot be sold as a going concern as the Corporate Guarantor of the Corporate Debtor do not possess any viable financial and tangible assets. Resolutions regarding liquidation costs as well as contribution by Financial Creditor to meet the shortfall have also been passed. The order of liquidation is to be passed - application allowed. Issues:Liquidation process initiation for Corporate Guarantors under the Insolvency & Bankruptcy Code, 2016.Detailed Analysis:1. Background and Application Filing:- The Resolution Professional filed applications under Section 33(1), 33(2) & 34 of the Insolvency & Bankruptcy Code, 2016 for the initiation of the liquidation process of the Corporate Guarantors and Corporate Debtor.- Corporate Guarantors were admitted into Corporate Insolvency Resolution Process (CIRP) by the Adjudicating Authority.- Committee of Creditors (CoC) meetings were held, and resolutions were passed for liquidation due to the lack of viable financial and tangible assets.2. Judicial Consideration:- The Tribunal considered the submissions and material on record and determined that liquidation was appropriate due to insignificant assets of the Corporate Guarantor.- Resolutions were passed by CoC in accordance with CIRP and Liquidation Process Regulations.- The Tribunal approved the appointment of the Resolution Professional as the Liquidator for the Corporate Guarantor.3. Order of Liquidation:- The Tribunal issued an order appointing the Resolution Professional as the Liquidator of the Corporate Guarantor.- All powers of the Board of Directors and key managerial persons ceased to exist, transferring to the Liquidator.- The Liquidator was directed to recover trade receivables and other credits, coordinate with authorities, and seek necessary directions from the Tribunal during the process.4. Operational Instructions:- The Liquidator's fees were determined based on the value of the liquidation estate assets.- Legal proceedings against the Corporate Guarantor were restricted, with exceptions for actions by the Liquidator with prior approval.- The liquidation order served as a discharge notice to officers, employees, and workmen of the Corporate Guarantor.5. Miscellaneous Directions:- Moratorium declared earlier ceased to exist.- The Registry was instructed to upload the order on the Official Website and send copies to relevant parties.- Another identical application was allowed for the initiation of the liquidation process for another Corporate Guarantor of the Corporate Debtor.This detailed analysis encapsulates the legal judgment's essence, highlighting the key aspects and decisions made by the Tribunal regarding the liquidation process initiation for the Corporate Guarantors under the Insolvency & Bankruptcy Code, 2016.