Commercial wisdom in insolvency supports liquidation where no viable resolution plan exists and statutory requirements are met.

Liquidation may follow a unanimous Committee of Creditors decision where the corporate debtor has no viable resolution prospect and the statutory conditions for liquidation are satisfied. The Appellate Tribunal treated the move to liquidation as a commercial decision, noting that the debtor's only substantial asset was a leased property whose lease had already been cancelled, no workable resolution plan was forthcoming, and attempts to renew the lease had failed. It held that appellate review is limited and cannot replace the CoC's business judgment. Promoters or shareholders were found to have no vested right to obstruct the liquidation order, and the proposed interest of one appellant was rejected for ineligibility concerns under the Code.

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Issues: Whether the liquidation order passed on the unanimous decision of the Committee of Creditors could be interfered with on the ground of alleged material irregularities in the corporate insolvency resolution process, and whether the appellants as promoters/shareholders had locus to challenge the liquidation.

Analysis: The Corporate Debtor's only substantial asset was the leased property, and the lease had been cancelled much before the insolvency commencement date. The Committee of Creditors considered the failed attempts to renew the lease, the absence of any workable resolution possibility, and the fact that no viable resolution plan was forthcoming. In such circumstances, the decision to move to liquidation was treated as a commercial decision taken unanimously by the Committee of Creditors. The Appellate Tribunal held that its review was limited and that it could not substitute its own view for the Committee's business judgment where the statutory requirements for liquidation were met. It also noted that the appellants, being promoters/shareholders, had no vested right to insist on hearing or to obstruct the liquidation order, and the proposed interest from the first appellant was not acceptable in view of ineligibility concerns under the Code.

Conclusion: The challenge to the liquidation order was rejected. The liquidation was held to be valid and not liable to interference.

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