NCLT dismisses liquidation on failure by the RP to call for bids

On failure by the Resolution Professional (RP) and Committee of Creditors (CoC) to fulfill their duties under the Insolvency and Bankruptcy Code (IBC), the Ahmedabad Bench of the NCLT rejected their application to liquidate a company under the moratorium..Sunrise Polyfilms Pvt Ltd, the corporate debtor, was put under insolvency resolution process on September 12, 2017, for which public announcement was made three days later. There was, however, no invitation for submission of bids, which is the duty of the RP under Section 25(2)(h).On the second meeting by the CoC which was held two months post admission, the CoC decided to liquidate the company for various reasons: that the company had not been operational for the past three years, all it had in assets were trucks lying around the value of which had depleted over time, assets other than trucks were not measurable and that the corporate debtor had lost all customers and employees..Allegations of fraud and siphoning of funds were also made against the promoters..Considering all of the above, the CoC decided that it is best to liquidate the company and applied to NCLT for liquidation..More than one month after the application for liquidation was filed, the promoter objected arguing that the company can easily be converted into a going concern and that creditors can be paid more than liquidation value within a reasonable time. It was argued that the RP has failed to comply with his duties under Section 25 since they have without exploring the possibility of revival blindly decided on liquidation..At the same time, an ally of the corporate debtor also intervened arguing that they had been in fact hiring trucks from the corporate debtor for various projects..This intervenor offered to step in as a resolution applicant with a resolution plan offering a sum greater than the liquidation, with full confidence that it could also take over the management of the company..NCLT held that the very intention of the IBC is to revive a company under Corporate Insolvency Resolution Process and not to liquidate it..Observing that the RP had failed to fulfill his obligation, the NCLT directed him to act in accordance with Section 25 of the IBC and dismissed the application for liquidation while allowing the intervenor to apply as a resolution applicant in the given case..Digant Kakkad appeared for the corporate debtor, while Prashant Sharma appeared for the intervenor. Senior Advocate Navin Pahwa along with Ritu Shah and Anip Gandhi appeared for RP..(Read the order)