2023 (9) TMI 1744 - AT - IBC

Maximisation of asset value and auction procedure: appeal dismissed where liquidation sale complied with prescribed auction norms and stakeholder participation.

Challenge concerned whether the liquidator complied with prescribed auction procedures and whether reduction in reserve price and subsequent sale breached ... Maximisation of value of assets - Reduction of 'Reserve Price' in subsequent auctions - Mode of sale and auction procedures - Liquidator's powers and duties - Stakeholders Consultation Committee and estoppel by participation - Section 61(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is seen from the record that there is no violation of the mode of auction as specified above. There is no documentary evidence to substantiate that there was any violation of Regulations 32, 33, 34 or 35 of the Liquidation Regulations, 2016. It is seen from the record that the auction was conducted on 29/12/2022; the entire sale consideration of Rs. 4,05,00,000/- was received from the second Respondent / Successful Auction Bidder and most importantly, it is significant to mention that the Sale Certificate was issued on 04/02/2023. On a pointed query from the bench as to why the Appellant was silent and had filed this Application belatedly, it is submitted that the Appellant is a Co-operative Bank and each step requires prior approval of the Board and further submitted that the regulations do not satisfy any specific time limit to challenge the actions of the Liquidator. We do not find any merit in these submissions and keeping in view that the IBC is a time bound process and the Sale Certificate had already been issued on 04/02/2023 and specifically having regard to the fact that the Appellant had attended the Stakeholders Consultation Committee Meetings and was aware of the Proceedings and consequently, this Tribunal is of the view that the Liquidator had followed the ‘Mode of Sale’ as specified under Schedule – I of the Regulations, 2016. This Company Appeal is dismissed accordingly. Issues: Whether the auction sale conducted by the Liquidator on 29/12/2022 and confirmed by issuance of the sale certificate on 04/02/2023 is vitiated by non-compliance with the IBBI (Liquidation Process) Regulations, 2016 (notably Regulations 32, 32A, 33, 35 and 36 and Schedule I) and should be set aside.Analysis: The liquidation estate, auction process and reserve price revisions were examined against the statutory framework permitting sale modes under Regulation 32, sale as a going concern under Regulation 32A, the prescribed mode of sale and limits on reduction of reserve price in Schedule I and Regulation 33, valuation requirements under Regulation 35, and asset sale reporting under Regulation 36. Documentary records of Stakeholders Consultation Committee meetings show the Appellant's attendance and awareness of proposals to reduce the reserve price, including a recorded recommendation to reduce the reserve price by 10% and subsequent approvals. The limits for reduction of reserve price (initial reduction up to 25% and further reductions up to 10% at a time) were applied. No reliable documentary evidence was produced to establish violation of the cited Regulations, collusion, or fraud in the auction process. The sale consideration was paid in full and the sale certificate issued prior to the challenge, while the insolvency process is time-bound and there was no timely challenge to the Liquidator's actions.Conclusion: The auction sale and subsequent sale certificate are not vitiated by non-compliance with the Liquidation Process Regulations, 2016; the appeal is dismissed and the sale is upheld in favour of the successful purchaser/respondent.