Tribunal adjusts liquidation process, cancels Swiss Challenge, emphasizes transparency & value.

The Tribunal partially modified the Impugned Order, canceling the second Swiss Challenge Process and directing the liquidator to undertake a private sale process in accordance with legal provisions, ensuring transparency and fairness. The appeal was disposed of with these directions, emphasizing the need for a balanced approach between timeliness and value maximization in the liquidation process.

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Issues Involved:
1. Legality of the stay on the Impugned Order and auction process.
2. Validity of the Swiss Challenge Process and its cancellation.
3. Allegations of malafide actions and undue haste by the liquidator.
4. Maximization of asset value and timeliness in the liquidation process.
5. Adherence to legal provisions and transparency in the sale process.

Detailed Analysis:

1. Legality of the Stay on the Impugned Order and Auction Process:
The appeal was filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), challenging the Impugned Order dated 16.8.2021 by the Adjudicating Authority (NCLT, Ahmedabad). The Appellant sought a stay on the Impugned Order and the auction process, which was granted by the Tribunal on 2.9.2021, stating, "This is a fit case for admission as well as for stay of the Impugned Order."

2. Validity of the Swiss Challenge Process and Its Cancellation:
The Corporate Debtor, ABG Shipyard Limited, underwent multiple rounds of e-auction for its assets, all of which were unsuccessful. Consequently, the liquidator initiated the Swiss Challenge Process for private sale of the Dahej Materials. The first Swiss Challenge Process failed, leading to the initiation of the second Swiss Challenge Process, where R.K. Industries was declared the anchor bidder. However, the liquidator received an unsolicited offer from WSRPL for the composite assets, leading to the cancellation of the second Swiss Challenge Process. The Tribunal noted that the liquidator has the power to cancel or modify the process, provided it is done without bias and in a transparent manner.

3. Allegations of Malafide Actions and Undue Haste by the Liquidator:
The Appellant argued that the liquidator showed undue haste and malafide intentions by favoring WSRPL without formal orders from the Adjudicating Authority. The Tribunal considered the liquidator's actions, including asking WSRPL to deposit a bank guarantee and submit a confidentiality agreement, as within his powers but emphasized the need for transparency and fairness.

4. Maximization of Asset Value and Timeliness in the Liquidation Process:
The Tribunal highlighted the objective of the liquidation process to achieve value maximization of assets. The liquidator's decision to sell the assets as a composite unit was driven by the stakeholders' wish to conclude the liquidation process early and maximize value. The Tribunal referred to the judgments in Swiss Ribbons (P) Ltd. vs. Union of India and Innovative Industries Limited vs. ICICI Bank & Anr., emphasizing the importance of value maximization.

5. Adherence to Legal Provisions and Transparency in the Sale Process:
The Tribunal stressed the need for the sale process to adhere to the provisions of IBC and Liquidation Regulations, ensuring fairness and transparency. The Impugned Order directed the liquidator to complete the private sale within three weeks and allow all parties involved in the hearing to participate. The Tribunal modified this order, stating that the sale process should be restarted with adequate preparation and open notice to prospective buyers.

Conclusion:
The Tribunal partially modified the Impugned Order, canceling the second Swiss Challenge Process and directing the liquidator to undertake a private sale process in accordance with legal provisions, ensuring transparency and fairness. The appeal was disposed of with these directions, emphasizing the need for a balanced approach between timeliness and value maximization in the liquidation process.

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