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2018 (2) TMI 985

Initiating Corporate Insolvency Resolution Process - Held that:- In the case in hand, it is an undisputed fact that Corporate Debtor is a going concern and has about 1178 employees and workmen on its Roll. RP has also admitted that corporate debtor is a going concern. Section 33(7) also provides that order of liquidation shall be deemed to be a notice of discharge to the officers, employees and workers of the Corporate Debtor, except when the business of the Corporate Debtor is continued during the liquidation process. Regulation 32 also provides provision for the manner of sale during liquidation process which shows that it can be by way of slump sale and slump sale means the transfer of an undertaking as a whole. In the light of the order of the Hon’ble Supreme Court in case of Allahabad Bank (2000 (9) TMI 931 - SUPREME COURT OF INDIA), we pass following orders in addition to the orders made above. - (1) The Liquidator shall try to dispose off the Corporate Debtor company as a going concern after publication of notice in newspaper with the reserve price which shall be equal to the total debt amount including interest and maximum period applicable for trying the sale of the Co .....

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was subsequently extended by another period of 90 days vide an order dated 19th September 2017. Extended period for submission of CIRP was scheduled to end on 1st January 2018. It is further stated in the report that on 22.12.2017, he received an expression of interest for submission of Resolution Plan from RARE Asset Reconstruction Company and the same was shared by him instantly over email to the Members of the CoC. After that in the 11th meeting of the CoC held on 26.12.2017, the proposed draft Resolution Plan, put forward by Resolution Applicant was placed before the CoC and discussed. It was then decided to convene another meeting of CoC on 28th December 2017 wherein the Resolution Applicant was invited by the R.P. for negotiation with the CoC members on the Resolution Plan, being proposed to be submitted by them. On 28th December 2017, in its 12th meeting, the Resolution Applicant discussed and negotiated on the terms of the proposed Resolution Plan, and it was decided that RARE ARC will forward the revised Resolution Plan to the Resolution Professional, which will be circulated to all the Members for their review and voting through Electronic mode. The Resolution Plan was d .....

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ution Plan. Only one member having 1.67% voting share abstained from the voting. As per requirement of section 30, sub-clause (4), the Committee of Creditors may approve a Resolution Plan by a vote of not less than 75% of the voting share of the Financial Creditor. Thus it is thus clear that the Resolution Plan failed even during the extended period of the CIRP. Therefore, we reject the Resolution Plan under section 31 of IB Code, for the non-compliance of the requirements specified therein. Consequently, Corporate Debtor company will automatically go into liquidation as per provisions of section 33 of the Insolvency & Bankruptcy Code, 2016. The Resolution Professional, Shri Sumit Binani appointed for the Corporate Insolvency Resolution Process under Chapter II shall act as the Liquidator for liquidation unless replaced by the Adjudicating Authority under sub-section (4) of section 34. Shri Sumit Binani, after his appointment under this section as Liquidator, will exercise all the powers of the Board of Directors, key managerial personnel and the partners of the Corporate Debtor, as the case may be, shall cease to affect and shall be vested in the Liquidator. The personnel of t .....

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ther stated that by closing the company and by discharging 1,178 employees, their families, numerous small vendors, suppliers, contractors, job workers and transporters of the company totalling about 10,000 people will also be affected. In the affidavit filed by the employees and workmen, emphasis has been laid down on section 33, sub-clause (7) read with regulation 32 of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulation, 2016 which provides for a slump sale of the assets of the company and clearly permits the sale of the business of the company including all its assets and properties as a going concern. The Ld. Counsel, representing the employees and workers has emphasised the sale of assets of the company as a going concern will save the livelihood of workers and it will also be beneficial to the creditors. It is further stated in their representation that slump sale is nothing but the transfer of the whole or part of a business concern as a going concern. It is further stated in the affidavit that Hon ble Supreme Court and High Court has often directed the sale of assets of the company as a going concern with the object of preserving the employment .....

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ocess) Regulation, 2016 provides the manner of sale during the liquidation process, which is given below for ready reference. Chapter-VI- Realisation of Assets. 32. Manner of sale-The liquidator may (a) sell an asset on a standalone basis; or (b) sell (i) The assets in a slump sale, (ii) A set of assets collectively, or (iii) The assets in parcels. It is thus apparent that above Regulation also provides the sale of the assets in a slump sale. It is also important to point out that under Income-tax Act, 1961, section 2, sub-clause (42C), slump sale has been defined, which is given as under: Slump sale means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales. Explanation 1 for the purpose of above clause provides that undertaking shall have the same meaning as assigned to it in explanation to clause (19)(AA). Clause 19(AA) of section 2 of the Income-tax Act, 1961 provides that all the properties of the undertaking, being transferred by the demerged company, immediately before the demerger, become the property of the Resulting Company by virtue of demerger. I .....

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transfer of an undertaking as a whole. In the light of the order of the Hon ble Supreme Court in case of Allahabad Bank (supra), we pass following orders in addition to the orders made above. (1) The Liquidator shall try to dispose off the Corporate Debtor company as a going concern after publication of notice in newspaper with the reserve price which shall be equal to the total debt amount including interest and maximum period applicable for trying the sale of the Corporate Debtor as a going concern will be only three months from the date of the order, if the process of sale as a going concern is failed during this period, then process of the sale of the assets of the company will be according to the provisions of sale of asset of the Corporate Debtor prescribed under section 33, Chapter VI of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. In case it is not concluded within this period, the order of this Court directing the sale of the company as a going concern shall stand set aside and corporate debtor to be liquidated in the manner as laid down in Chapter III of the Liquidation Process provided in Insolvency & Bankruptcy Code. (2) T .....

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