2021 (12) TMI 1429 - AT - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - HELD THAT - To achieve Beneficial Liquidation provided for under Section 35(1)(e) and maximisation of the value of assets under Section 53 and having regard to all reasons given below it is found just expedient to exercise the inherent powers under Rule 11 of the NCLAT Rules 2016 to extend the period by six weeks to enable the Liquidator to attempt the Sale as a Going Concern at an appreciable value. The Liquidator has adhered to the directions of the Tribunal and has acted as per the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016. This extension of six weeks is being granted to achieve the objective of Beneficial Liquidation and attempt to keep the business of the Company as a Going Concern . - Appeal disposed off.

Summary

Issues Involved:
1. Legality of the Liquidation Process and Sale of Assets of the Corporate Debtor.
2. Compliance with the Directions of the Adjudicating Authority and the Tribunal.
3. Consideration of Proposals from Prospective Buyers.
4. Procedural and Regulatory Adherence by the Liquidator.
5. Maximization of Asset Value and Beneficial Liquidation.

Detailed Analysis:

1. Legality of the Liquidation Process and Sale of Assets of the Corporate Debtor:
The appeals challenge the common impugned order dated 18.12.2020, which allowed the liquidation process and sale of the assets of the Corporate Debtor. The Adjudicating Authority observed the deteriorating financial position and condition of the assets, the necessity to release employees' salaries, and the adverse effects of natural calamities on the shipyard. It concluded that selling the assets was appropriate to prevent further depreciation.

2. Compliance with the Directions of the Adjudicating Authority and the Tribunal:
The Tribunal had previously directed the Liquidator to attempt to sell the Corporate Debtor as a going concern. Despite multiple efforts, including public announcements and extensions for submission of Expression of Interest (EOI), no compliant scheme was received. The Liquidator followed the Tribunal's directions and took steps to sell the Corporate Debtor as a going concern, but no earnest money deposit (EMD) was made by any prospective buyer.

3. Consideration of Proposals from Prospective Buyers:
Several appellants, including M/s. PGI Global and Bhartiya Kamgar Sena Workmen Union, argued that the Liquidator did not consider their proposals adequately. M/s. PGI Global contended that it was ready to invest substantially higher than the liquidation value but was not given a fair opportunity. The Tribunal noted that no compliant scheme with EMD was submitted within the stipulated time, and the Liquidator had acted in accordance with the regulations.

4. Procedural and Regulatory Adherence by the Liquidator:
The Liquidator published EOIs in multiple newspapers and on the Corporate Debtor's website, extended deadlines, and issued invitations to interested parties. The Liquidator's actions were consistent with the Tribunal's directions and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The Tribunal found no deficiency in the Liquidator's performance.

5. Maximization of Asset Value and Beneficial Liquidation:
The Tribunal emphasized the importance of selling the Corporate Debtor as a going concern to preserve employment and maximize asset value. It extended the period by six weeks to enable the Liquidator to attempt the sale as a going concern at an appreciable value. The extension was granted to achieve beneficial liquidation and adhere to the objective of maximizing asset value.

Conclusion:
The Tribunal concluded that the Liquidator had adhered to the directions and regulations, and the appeals were disposed of with directions to extend the period for attempting the sale as a going concern. The Liquidator was given six weeks to finalize the sale, provided the EMD was deposited within two weeks. The Tribunal's decision aimed to ensure beneficial liquidation and maintain the Corporate Debtor as a going concern.