2022 (5) TMI 206 - Tri - Insolvency and Bankruptcy

Dissolution of Corporate Debtor: Recovery Efforts Authorized, Debts Declared Bad

The Tribunal granted the Applicant's prayer for dissolution of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016. With no ... Dissolution of the Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016, r/w Regulations 44 and 45 of IBBI (Liquidation Process) Regulations, 2016 - HELD THAT:- It is noticed that since the liquidation process has been completed and there is nothing remaining in the corporate debtor, there appears no impediment in granting prayer of the applicant. As a consequence, through this Order it is hereby declared that this is a fit case for order of dissolution. The Corporate Debtor M/s. SAKA Limited, stands 'Dissolved' from the date of this Order - Application allowed. Issues:Application for dissolution of Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016.Analysis:The Applicant, acting as the Liquidator, filed an application seeking the dissolution of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016. The Tribunal had previously ordered the liquidation of the Corporate Debtor and appointed the Applicant as the Liquidator. The Applicant reported a significant loss in the Corporate Debtor's financials, with no tangible assets but having trade receivables and loans and advances. Subsequently, the Tribunal directed the Applicant to assess the recoverability of the loans and advances, leading to a detailed report by Chartered Accountants regarding the non-recoverable debts. The Stakeholders Consultation Committee was convened to discuss the recoverability of debts and the possibility of dissolution due to the lack of assets for recovery.During the Stakeholders Consultation Committee meeting, it was agreed that the loans and advances were to be considered bad debts, and efforts to recover a specific amount were authorized. However, if recovery was uncertain, the Liquidator was empowered to file for dissolution as there were no other assets to realize. The Stakeholders emphasized the importance of seeking dissolution if there was no hope for recovery, considering the expenses incurred during the Corporate Insolvency Resolution Process (CIRP) and Liquidation. The Liquidator informed the sole stakeholder about the progress and the need for NCLT permission for recovery proceedings, which was deemed doubtful by the stakeholder, leading to a decision in favor of dissolution.The Tribunal noted the completion of the liquidation process and the absence of any remaining assets in the Corporate Debtor, leading to the decision to grant the Applicant's prayer for dissolution. Consequently, the Corporate Debtor was declared dissolved, and the sole stakeholder was directed to pay outstanding amounts towards CIRP and liquidation expenses. The Tribunal ordered the closure of bank accounts and directed the Registry to close the case file and update the status of the Corporate Debtor with relevant authorities. Finally, the Tribunal allowed the application for dissolution, concluding the proceedings effectively.