Liquidator entitled to percentage fees on Rs. 78 crore asset sales under IBBI Regulation 4

The NCLAT allowed the appeal by remanding the matter back to the tribunal. The appellant liquidator claimed entitlement to percentage fees based on total sales of Rs. 78,47,31,778/- realized during his tenure across different time periods. The tribunal had erroneously rejected the application without considering that under Regulation 4 of IBBI (Liquidation Process) Regulation, 2016 and IBBI circular dated 28.09.2023, liquidator fees should be calculated on "amount realized" from asset sales. The NCLAT found the tribunal failed to properly consider the liquidator's sales achievements and fee entitlement structure, setting aside the dismissal order and directing fresh consideration of the application.

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Issues involved:
The judgment involves the dismissal of an application under Section 60 (5) (c) of the Insolvency & Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016, regarding the entitlement of a Liquidator to a fee for the realization of assets of a Corporate Debtor.

Summary:
The appellant, who worked as the Liquidator of the Corporate Debtor, filed an application seeking fee payment for asset realization. The application was dismissed, leading to the current appeal. The appellant claimed entitlement to a fee based on Regulation 4 of the Regulations, emphasizing the term "amount realized." The appellant sold various assets during the liquidation period, but the application was rejected based on a narrow interpretation of the fee entitlement. The appellant argued that the Tribunal erred in not considering all sales made during the liquidation period.

Upon review, the Tribunal found an error in the previous decision, noting that the appellant's various sales during the liquidation period should be considered for fee calculation. The Tribunal referred to the unamended Regulation 4 (3) and a circular clarifying the term "amount realized." The Tribunal set aside the impugned order, remanding the matter back to the Tribunal for reconsideration. The appellant was directed to provide a breakdown of sales made during the liquidation period for proper fee calculation.

In conclusion, the appeal succeeded, and the Tribunal ordered a reevaluation of the appellant's fee entitlement based on all sales made during the liquidation period, in accordance with the relevant regulations and clarifications.

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