Tribunal upholds legality of private sale, rejects challenges on Ex-Promoters' eligibility.

The Tribunal dismissed all applications challenging the private sale conducted by the Liquidator of the corporate debtor's assets. It affirmed the legality of the private sale, upheld the ineligibility of Ex-Promoters to participate in the bidding process under Section 29-A of the IBC, and ruled that Regulation 31A of the IBBI (Liquidation Process) Regulations does not apply retrospectively. The Tribunal emphasized the Liquidator's compliance with prescribed procedures and regulations, ultimately confirming the validity of the private sale and rejecting all challenges brought before it.

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Issues Involved:
1. Legality of the private sale conducted by the Liquidator.
2. Eligibility of Ex-Promoters to participate in the bidding process.
3. Constitution of Stakeholders Consultation Committee under Regulation 31A of the IBBI (Liquidation Process) Regulations, 2016.
4. Validity of the private sale of corporate debtor’s assets.
5. Consideration of the corporate debtor as a going concern in liquidation.

Detailed Analysis:

1. Legality of the Private Sale Conducted by the Liquidator:
In IA No.227/2021, the applicants, Ex-Promoters of M/s Supreme Tex Mart Limited, challenged the private sale conducted by the Liquidator. The Tribunal noted that the Liquidator had made repeated attempts to sell the corporate debtor through public auctions, which failed due to lack of bidders. The private sale was conducted in compliance with Regulation 33 of the IBBI (Liquidation Process) Regulations, 2016, which allows private sales under specific conditions. The Tribunal found no merit in the application and dismissed it, stating that the Liquidator had followed the prescribed procedures.

2. Eligibility of Ex-Promoters to Participate in the Bidding Process:
In IA No.228/2021, the Ex-Promoters sought directions to allow them to bid for the corporate debtor as a going concern. The Tribunal reiterated that the Ex-Promoters were ineligible to bid under Section 29-A of the IBC, 2016, as they were declared willful defaulters. The Tribunal also emphasized that the Ex-Promoters did not have any vested right to be preferred over other bidders. The application was dismissed, and the Tribunal found no violation of the Code by the Liquidator.

3. Constitution of Stakeholders Consultation Committee:
In IA No.285/2021, the State Bank of India sought the constitution of a Stakeholders Consultation Committee (SCC) under Regulation 31A of the IBBI (Liquidation Process) Regulations, 2016. The Tribunal held that Regulation 31A, introduced on 25.07.2019, does not have retrospective effect and thus does not apply to liquidation processes commenced before this date. The Tribunal emphasized that applying the regulation retrospectively would delay the liquidation process and reduce asset recovery. The application was dismissed.

4. Validity of the Private Sale of Corporate Debtor’s Assets:
In IA No.536/2021, M/s Bluechip Worldwide Yarn Private Limited contested the private sale of the corporate debtor’s assets and sought to purchase the debtor as a going concern. The Tribunal noted that the Liquidator had made sufficient efforts to sell the corporate debtor through public auctions before proceeding with the private sale. The Tribunal found no shortcomings in the Liquidator’s actions and dismissed the application, confirming the validity of the private sale.

5. Consideration of the Corporate Debtor as a Going Concern in Liquidation:
In IA No.536/2021 and related applications, the applicants argued for the sale of the corporate debtor as a going concern to maximize value and protect employee interests. The Tribunal acknowledged the benefits of selling the corporate debtor as a going concern but noted that the Liquidator had already conducted multiple unsuccessful auctions for this purpose. The Tribunal dismissed the applications, stating that the Liquidator had complied with the relevant provisions of the Code and Regulations.

Conclusion:
The Tribunal dismissed all applications, upholding the Liquidator’s actions and the private sale conducted. The Tribunal confirmed that the Ex-Promoters were ineligible to bid under Section 29-A of the IBC, 2016, and that Regulation 31A of the IBBI (Liquidation Process) Regulations, 2016, does not apply retrospectively.

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