06/04/2022

Sending a Corporate Debtor into liquidation just because the liquidation value is more than the enterprise value, would not be in keeping with the objectives of the IBC – CFM Asset Reconstruction Pvt. Ltd. Vs. S S Natural Resources Pvt. Ltd. – NCLT Kolkata Bench

In this case, a Financial Creditor is pursuing its application for liquidation because the liquidation value is more than the enterprise value. The Adjudicating Authority holds that but that cannot be a ground for sustaining this application, nor is it in line with the objects of the Code. Sending the Corporate Debtor into liquidation just because the liquidation value is more than the enterprise value, would not be in keeping with the objectives of the Code. The Code is not about maximising value at all costs even if it means corporate death, which will inevitably ensue if the company is sent into liquidation. In so far as the use of the term “shall” in section 33(4) is concerned, we are convinced that this will have to be construed in the conspectus of facts that each case presents itself with. A mechanical interpretation that once a default is established, then liquidation should be the result, would not sub-serve the purposes of the Code.

Sending a Corporate Debtor into liquidation just because the liquidation value is more than the enterprise value, would not be in keeping with the objectives of the IBC – CFM Asset Reconstruction Pvt. Ltd. Vs. S S Natural Resources Pvt. Ltd. – NCLT Kolkata Bench Read Post »

Timeline prescribed in CIRP Regulation 35A is only directory and the timeline prescribed for transactions under Section 46 does not cover the transactions covered by Section 49 and 66 of the Code – Aditya Kumar Tibrewal RP Vs. Om Prakash Pandey, Suspended Director – NCLAT New Delhi

Following are the questions which are arising for consideration in this Appeal:

i. Whether an Application by the Resolution Professional relating to a Transaction covered under Section 43, 45, 49 and 66 is mandatory to be filed within the period of 135th Day of the Insolvency Commencement Date and in event the Application is filed beyond such period, the same is liable to be rejected due to non-compliance of Regulation 35A of CIRP Regulations, 2016?

ii. Whether time period prescribed under Regulation 35A of the CIRP Regulations, 2016 is mandatory or directory?

iii. Whether Transaction claimed to be defrauding the Creditor under section 49 and fraudulent trading or wrongful trading within meaning of Section 66 can be questioned only within time period as prescribed under Section 46 i.e. one year or 2 years respectively and Application alleging defrauding the Creditors and transaction to be fraudulent trading or wrongful trading is liable to be rejected if it is filed beyond the period prescribed under Section 46 of the Code?

iv. Whether in the Application filed by the Appellant being I.A. No. 742 of 2020 there were any pleadings of fraud as contemplated by Section 49 and 66 of the Code?

v. Whether the Adjudicating Authority committed error in rejecting the Application being I.A. No. 742 of 2020?

Timeline prescribed in CIRP Regulation 35A is only directory and the timeline prescribed for transactions under Section 46 does not cover the transactions covered by Section 49 and 66 of the Code – Aditya Kumar Tibrewal RP Vs. Om Prakash Pandey, Suspended Director – NCLAT New Delhi Read Post »

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