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2019 (5) TMI 517 - Tri - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process - Corporate Debtor - rejection of the resolution plan by CoC - HELD THAT - It is seen from the record that two units of the Corporate Debtor were running smoothly at one point of time during CIRP. The Resolution Professional did not disclose in his final report whether those units are still running or not. If those units are still running then, this Authority would advice the Liquidator to liquidate them as going concern so as to fetch maximum liquidation price. The Corporate Debtor is admitted in process of liquidation - Order of Moratorium declared.
Issues:
- Application under Section 9 of IBC 2016 for Corporate Insolvency Resolution Process (CIRP) - Appointment of interim Resolution Professional and subsequent replacement - Formation and decisions of Committee of Creditors (CoC) - Extension of CIRP period and invitation of EoI/Resolution plans - Rejection of resolution plan by CoC and subsequent request for liquidation - Objection by unsuccessful Resolution Applicant and legal considerations - Order of liquidation of the Corporate Debtor and appointment of Liquidator - Directions for liquidation process, communication, and reporting Issue 1: Application under Section 9 of IBC 2016 for CIRP The Operational Creditor filed an application under Section 9 of IBC 2016 against the Corporate Debtor, leading to the Corporate Debtor's admission into the Corporate Insolvency Resolution Process (CIRP) by the Adjudicating Authority. Issue 2: Appointment of interim Resolution Professional and subsequent replacement Mr. Saradindu Jena was initially appointed as the interim Resolution Professional, but due to CoC's decisions, he was replaced by Mr. Sambhulal Agarwal. The new Resolution Professional took charge of the Corporate Debtor's affairs, assessed its assets, and reconstituted the Committee of Creditors based on claims from Financial Creditors. Issue 3: Formation and decisions of Committee of Creditors (CoC) The CoC, consisting of State Bank of India and other Financial Creditors, made decisions regarding the IRP's replacement, extension of CIRP period, and rejection of resolution plans. The CoC's rejection led to the request for liquidation of the Corporate Debtor. Issue 4: Extension of CIRP period and invitation of EoI/Resolution plans The CIRP period was extended by 90 days as per Section 12(2) of IBC 2016. The Resolution Professional invited Expression of Interest (EoI) and Resolution plans from prospective applicants, with a deadline for submission. Issue 5: Rejection of resolution plan by CoC and subsequent request for liquidation The CoC rejected a resolution plan by 100% voting shares, leading to the instruction for liquidation of the Corporate Debtor. An unsuccessful Resolution Applicant objected to this decision, seeking consideration for approval of their plan. Issue 6: Objection by unsuccessful Resolution Applicant and legal considerations The unsuccessful Resolution Applicant's objection was considered in light of legal precedents, leading to the conclusion that the CoC's rejection could not be overturned, necessitating the order of liquidation due to the absence of an approved resolution plan. Issue 7: Order of liquidation of the Corporate Debtor and appointment of Liquidator In the absence of an approved resolution plan, the Adjudicating Authority ordered the liquidation of the Corporate Debtor. CA. Sambhulal Agarwal was appointed as the Liquidator, with specific directions for public announcements and communication to regulatory bodies. Issue 8: Directions for liquidation process, communication, and reporting The Liquidator was directed to proceed with the liquidation process as per the Insolvency and Bankruptcy Code, including filing preliminary and progress reports within specified timelines. The order also addressed the cessation of the moratorium and the liquidation of operational units if still in operation. This detailed analysis covers the key issues addressed in the legal judgment delivered by the National Company Law Tribunal, Kolkata Bench, providing a comprehensive overview of the proceedings and outcomes related to the Corporate Insolvency Resolution Process and subsequent liquidation of the Corporate Debtor.
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