Liquidation after rejection of resolution plans: moratorium ends, and going-concern sale must be explored first

Liquidation was justified after the sole Committee of Creditors rejected all resolution plans and resolved to liquidate the corporate debtor. The statutory preconditions under the Insolvency and Bankruptcy Code, 2016 were treated as satisfied because the resolution process had been adequately explored, the resolution professional consented to act as liquidator, and the Committee of Creditors addressed liquidation costs and a possible going-concern sale. The moratorium therefore ceased, and the liquidator was directed to conduct liquidation under the Code and the Liquidation Process Regulations, while first exploring sale of the corporate debtor as a going concern.

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Issues: Whether liquidation of the corporate debtor was warranted on the rejection of all resolution plans by the sole Committee of Creditors, and whether the resolution professional could be appointed as liquidator with directions to first explore sale of the corporate debtor as a going concern.

Analysis: The sole member of the Committee of Creditors had rejected all the resolution plans and resolved to liquidate the corporate debtor. The record also showed that the resolution process had been sufficiently explored, that the resolution professional had given consent to act as liquidator, and that the Committee of Creditors had resolved on contribution towards liquidation costs and on exploring a going concern sale in liquidation. In these circumstances, the statutory conditions for liquidation under the Insolvency and Bankruptcy Code, 2016 were satisfied. The moratorium consequently had to cease, and the liquidator was required to carry out liquidation in accordance with the Code and the Liquidation Process Regulations, including the option to first attempt sale of the corporate debtor as a going concern.

Conclusion: Liquidation was ordered, the resolution professional was appointed as liquidator, the moratorium ceased, and the liquidator was directed to proceed in accordance with the statutory liquidation framework, including first exploring a going concern sale.

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