Liquidation on creditor recommendation follows when the resolution process ends without plan confirmation and voting requirements are met

Where the Corporate Insolvency Resolution Process has ended without confirmation of a resolution plan, a unanimous Committee of Creditors decision to liquidate the corporate debtor triggers liquidation under the Insolvency and Bankruptcy Code. The Adjudicating Authority must act on that recommendation when it is taken with the requisite voting share before plan confirmation. The record also noted consent of the proposed liquidator, valid authorisation, and directions for consequential liquidation steps, including public announcement, statutory intimation, investigation of avoidable transactions, and continuation of the going concern arrangement until further orders.

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Issues: Whether liquidation of the corporate debtor was liable to be ordered on the recommendation of the Committee of Creditors after the Corporate Insolvency Resolution Process had ended and no resolution plan had been confirmed.

Analysis: The Corporate Insolvency Resolution Process had run its course and the Committee of Creditors had unanimously resolved to liquidate the corporate debtor. Section 33(2) of the Insolvency and Bankruptcy Code, 2016 mandates liquidation where the Adjudicating Authority is informed of such a decision by the requisite voting share before confirmation of a resolution plan. The record also showed consent of the proposed liquidator, validity of authorization to act, and the need to continue consequential liquidation steps, including public announcement, statutory intimation, investigation of avoidable transactions, and continuation of the going concern arrangement until further orders in the pending appellate proceedings.

Conclusion: Liquidation of the corporate debtor was ordered and the proposed liquidator was appointed to conduct the liquidation process.

Final Conclusion: The application succeeded, and the corporate debtor was directed to proceed into liquidation under the Insolvency and Bankruptcy Code, with all ancillary liquidation directions made operative.

Ratio Decidendi: When the Committee of Creditors resolves to liquidate the corporate debtor by the requisite voting share before confirmation of a resolution plan, the Adjudicating Authority must pass a liquidation order under Section 33(2) of the Insolvency and Bankruptcy Code, 2016.

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