2020 (9) TMI 836 - Tri - Insolvency and Bankruptcy

Liquidation of Corporate Debtor - section 33 of the Insolvency and Bankruptcy Code 2016 - HELD THAT - There is no scope for revival of the company considering the situation of the company and further there is no asset and income of the company to meet the CIRP expenses. Therefore the CoC has resolved for liquidation of the Corporate Debtor vide its Third meeting dated 23.01.2020. It is also to be noted that this Adjudicating Authority has no jurisdiction to interfere in the commercial wisdom of the CoC. Application is allowed and the Adjudicating Authority passes an order for initiation of liquidation of the Corporate Debtor - moratorium shall cease to have effect.

Summary

Issues:
Liquidation of Corporate Debtor under section 33 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:
The Applicant, as the Interim Resolution Professional (IRP) of the Corporate Debtor, filed an application for liquidation of the Corporate Debtor under section 33 of the Insolvency and Bankruptcy Code, 2016, and for the appointment of the Liquidator. The case originated from a petition filed by an Operational Creditor against the Corporate Debtor seeking initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IB Code, which was admitted by the Adjudicating Authority. The First Meeting of Committee of Creditors (CoC) discussed the company's status, highlighting the non-availability of documents and the financial statements accessible from the MCA website. Subsequently, in the Third CoC meeting, it was decided that due to the lack of scope for revival and insufficient assets or income, the company should be liquidated through the IRP under section 33 of the IB Code.

The CoC failed to appoint a Resolution Professional (RP) within the stipulated time frame, leading to the IRP continuing to act as the deemed RP. The Adjudicating Authority, after hearing the Applicant and reviewing the records, found no possibility of the company's revival due to its financial situation and lack of assets or income to cover CIRP expenses. The CoC's decision for liquidation was upheld, emphasizing that the Adjudicating Authority cannot interfere with the commercial wisdom of the CoC, as established in previous judgments, including the Supreme Court's ruling in a specific case.

Consequently, the Adjudicating Authority issued various orders related to the liquidation process, including the cessation of the moratorium, public announcement of liquidation, transfer of powers to the Liquidator, restrictions on legal proceedings, and the communication of the order to relevant authorities. The Liquidator was appointed, and specific directives were outlined for the conduct of the liquidation proceedings, emphasizing cooperation from the Corporate Debtor's personnel and the entitlement of the Liquidator to charge fees for the process. The order concluded by allowing the application for liquidation and appointing the Liquidator for the Corporate Debtor, thereby disposing of the instant application.