2022 (5) TMI 1201 - Tri - Insolvency and Bankruptcy

Court grants early dissolution of Corporate Debtor due to lack of tangible assets

The court granted an application for the early dissolution of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016. The ... Dissolution of Corporate Debtor - Section 54 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 14 of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - HELD THAT:- It is declared that not only it is just and equitable but as all the assets of the Corporate Debtor is sold and disposed of, no asset is available for the purpose of ‘Liquidation’ as reported by Learned Liquidator, this is a fit case of a Corporate Debtor to be dissolved as prescribed under Section 54 of The Insolvency and Bankruptcy Code, 2016. Ordered accordingly, stood ‘Dissolved’ from the date of this Order. Since the Debtor Company stood Dissolved vide this order and no proceedings are now pending, therefore the Registry is directed that the case file be consigned to records. Application allowed. Issues involved:Application for early dissolution of Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016.Detailed Analysis:1. Background and Initiation of Liquidation Process:The Liquidator filed an application seeking an Order for the early granting of 'Dissolution' of the Corporate Debtor under Section 54 of the Insolvency and Bankruptcy Code, 2016. The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, and the Liquidation Process commenced after no resolution plan was received. The Liquidator reported the lack of tangible assets, with only shares in a cooperative bank and bank balances available.2. Realization of Assets and Liquidation Process:Efforts were made to realize assets, including contacting banks for share certificates and transferring funds to the liquidation account. The total realization after transferring all funds was detailed, highlighting issues such as unadjusted charges and the balance in the liquidation account. Loans and advances recorded in the books were deemed unrealizable due to lack of supporting documentation.3. Financial Constraints and Expenditure:The Liquidator faced financial constraints as there were no assets for liquidation, and personal expenditure was incurred to comply with essential procedures. It was noted that funds were insufficient to cover liquidation costs, and the realizable properties of the Corporate Debtor were inadequate to meet the process's expenses.4. Reports and Compliance:The Liquidator submitted quarterly reports as per regulations and filed the Final Report along with a Compliance Certificate. The Final Progress Report indicated the absence of assets or trade receivables, leading to the conclusion that opting for 'Dissolution' would be more suitable than liquidation due to the absence of saleable assets.5. Decision for Dissolution:Based on Section 54 of the Insolvency and Bankruptcy Code, 2016, and considering the complete liquidation of assets and absence of assets for liquidation, the Corporate Debtor was ordered to be dissolved. The Order declared the Corporate Debtor dissolved from the date of the Order, and the case file was directed to be consigned to records as no proceedings were pending.6. Administrative Actions:The Registry was instructed to forward a copy of the Order to the relevant authorities and the Registrar of Companies for further necessary action. The application was allowed, the case was closed, and the Corporate Debtor was officially dissolved.This detailed analysis of the judgment showcases the process leading to the dissolution of the Corporate Debtor, highlighting the financial constraints, asset realization efforts, compliance with regulations, and the final decision for dissolution based on the provisions of the Insolvency and Bankruptcy Code, 2016.