2022 (8) TMI 177 - Tri - Insolvency and Bankruptcy

Seeking Liquidation of Corporate Debtor - section 33 of the Insolvency Bankruptcy Code 2016 - HELD THAT - The liquidation of the Company with following directions - a. Upon perusal of the documents records made available and submissions of the Counsel for the RP in the fifth CoC meeting held on 15.03.2021 the CoC decided to Liquidate the Corporate Debtor and directed the RP to file an application under section 33 (2) of the Code for liquidation of the Corporate Debtor. b. In view of the decision of the CoC we are inclined to admit the IA 971/2021 in CP 1427/2019 to initiate liquidation process against the Corporate Debtor. Accordingly the Adjudicating Authority Orders for initiation of Liquidation of the Corporate Debtor. c. In view of the above this Bench hereby appoints Ms. Nishi Jain as Liquidator having Reg. IBBI/IPA-001/IPP01662/ 2019-20/12664 having its address at A-102 Krishna Tower Ashok Nagar Kandivali East Mumbai - 400101 as Liquidator in terms of section 34(1) of the Code. d. The fees of the liquidator to be paid as approved by the CoC. e. The Liquidator shall initiate the liquidation process as envisaged under Chapter-III of the Code and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016; f. Whenever the Liquidator issues any publication in the newspapers the said shall be published in widely circulated newspapers in the State in which the Registered office of the Company is incorporated. g. Public Notice shall be issued in two newspapers viz. in Times of India/Business Standard (English) and Navshakti (Marathi) stating that the Corporate Debtor is in liquidation as required in terms of section 33(1) of the Code; h. All the powers of the Board of Directors and key managerial persons of the Corporate Debtor shall cease to exist. All these powers shall henceforth be vest with the Liquidator; k. The personnel of the Corporate Debtor are directed to extend all co-operation to the Liquidator as required by him in managing the liquidation process of the Corporate Debtor; l. On initiation of the liquidation process but subject to section 52 of the Code no suit or other legal proceeding shall be instituted by or against the Corporate Debtor save and except the liberty to the liquidator to institute suit or other legal proceeding on behalf of the Corporate Debtor with prior approval of this Adjudicating Authority as provided in section 33(5) of the Code read with its proviso; m. This liquidation order shall be deemed to be a notice of discharge to the officers employees and workmen of the Corporate Debtor except to the extent of the business of the Corporate Debtor continued during the liquidation process by the Liquidator; n. A copy of this order shall be served by the Applicant/ RP on the Registrar of Companies Maharashtra Mumbai within whose jurisdiction the Corporate Debtor has been registered for updating the Master Data of the Corporate Debtor. p. IA 971 of 2021 is allowed. File to be consigned to records.

Summary

Issues involved:
1. Application filed under section 33 of the Insolvency & Bankruptcy Code, 2016 seeking Liquidation Order and appointment of the Applicant as liquidator.
2. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor and appointment of Interim Resolution Professional (IRP).
3. Conduct of CoC meetings during the CIRP process.
4. Decision-making process leading to the resolution for liquidation of the Corporate Debtor.
5. Approval and appointment of the Liquidator.
6. Directions for the liquidation process and responsibilities of the Liquidator.

Issue 1: Application for Liquidation Order and appointment of Liquidator
The Application was filed under section 33 of the Insolvency & Bankruptcy Code, 2016 seeking a Liquidation Order for the Corporate Debtor. The Resolution Professional (RP) submitted the application based on the resolution passed by the Committee of Creditors (CoC) in its 5th meeting, indicating a requisite majority as per the Code.

Issue 2: Initiation of Corporate Insolvency Resolution Process (CIRP)
The Adjudicating Authority had directed the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on a petition filed by an Operational Creditor under section 9 of the Code. Ms. Nishi Jain was appointed as the Interim Resolution Professional (IRP) during this process.

Issue 3: Conduct of CoC meetings during CIRP
Several CoC meetings were conducted during the CIRP, where various matters were discussed and decisions were made. These meetings included discussions on claims, appointment of Registered Valuers, valuation of assets, and responses received from Expression of Interest (EoI) invitations.

Issue 4: Decision-making process for liquidation
After multiple CoC meetings and considering the lack of viable Resolution Plans, the CoC, with 100% voting share, passed a resolution for the liquidation of the Corporate Debtor. The decision was based on the absence of responses to Information Memorandum and the Letter of Undertaking from prospective Resolution Applicants.

Issue 5: Approval and appointment of the Liquidator
In the 5th CoC meeting, the CoC approved the liquidation of the Corporate Debtor and appointed Ms. Nishi Jain as the Liquidator. The fees of the Liquidator were to be paid as approved by the CoC, and the Liquidator was authorized to file the necessary application for liquidation.

Issue 6: Directions for the liquidation process
The Tribunal ordered the liquidation of the Company and appointed Ms. Nishi Jain as the Liquidator. Various directions were provided, including the initiation of the liquidation process, publication of notices, cessation of powers of the Board of Directors, cooperation from personnel, restrictions on legal proceedings, and updating of Corporate Debtor's data with the Registrar of Companies.

This detailed analysis covers the legal judgment issued by the National Company Law Tribunal, Mumbai Bench, regarding the liquidation of the Corporate Debtor and the appointment of the Liquidator based on the proceedings and decisions made during the Corporate Insolvency Resolution Process (CIRP).