The Kolkata Bench of the National Company Law Tribunal ( NCLT ) held that the primary goal of the Resolution Plan as well as the sale of a Corporate Debtor as a going concern remains the same as that of revival of the Corporate Debtor’s business.
The applicants are the successful bidder of the Corporate Debtor under section 60(5)(C) of the Insolvency and Bankruptcy Code, 2016 ( IBC ). The case of the Applicants herein is that the Adjudicating Authority, upon the filing of a petition being CP (IB) 511/KB/2018 under section 9 of the Code by Sauria Construction, the Operational Creditor, admitted the Corporate Debtor into Corporate insolvency Resolution Process ( CIRP ) on 21.08.2018. Thereafter, the Adjudicating Authority ordered the Corporate Debtor to be liquidated vide order dated 01.07.20191.
In compliance with the Code and in accordance with the Insolvency and Bankruptcy Board of India ( Liquidation Process Regulation ) 2016, public announcement for E-Auction of the Corporate debtor as a going concern was published on 22.08.2022. The E-auction was decided to be conducted on 31.08.2022. The reserve price was set as Rs. 48,00,00,000/-. The Earnest Money Deposit ( EMD )was set as Rs. 4,80,00,000/-.
The Applicant participated in e-auction and made bid of an amount of Rs. 60,20,00,000/- for the purchase of the Corporate Debtor as a going concern. On 03.09.2022, the liquidator sent Letter of Intent and informed the Applicant that the E-Auction was completed on 31.08.2022 and as per the result of the process, the Applicant was the successful bidder.
As of date the Applicant has paid the entire amount of consideration to the Liquidator along with interest and a sale certificate dated 14.12.2022 was also issued in favour of the Applicant.
The Applicant is a successful bidder for the sale of the Corporate Debtor as a going concern excluding the imported cooking plant and fibre line lying at CFS, Balmer Lawrie Kolkata and cash and cash equivalents.
It is to be noted that the primary goal of a resolution plan as well as the sale of a Corporate Debtor as a going concern remains the same i.e revival of the Corporate Debtor’s business. The struggles faced by the purchaser during the sale of a Corporate Debtor as a ‘going concern’ and that of the Successful Resolution Applicant are similar, if not the same.
In light of the aforementioned decision, it becomes clear that while the successful bidder is allowed the liberty to apply to the Adjudicating Authority claiming reliefs and concessions, the said reliefs and concessions cannot be too elaborate and general and must align with the process document in the liquidation proceedings.
Since, this is a ‘Going concern sale’ , the Successful Bidder shall make necessary applications to the concerned regulatory or statutory authorities for renewal of business permits and supply of essential services, if required, and all necessary forms along with filing fees etc. and such authority shall also consider granting the same keeping in mind the objectives of the Code which is intended to resolving the insolvency of the Corporate Debtor.
Further, it was noted that the Applicant has sought that the contracts and arrangements except those with existing promoters/directors of the Corporate Debtor shall remain in existence on the same terms and conditions.
A two-member bench of Balraj Joshi, Member ( Technical ) and Rohit Kapoor, Member ( Judicial ) observed that without having a clear picture of the various contracts between the Corporate Debtor and third-parties, carte blanche orders ought not be passed. As such, the prayers seeking carte blanche orders relating to contractual rights are not granted by this Adjudicating Authority.
The Tribunal held that the sale of the assets of the Corporate Debtor ‘as a going concern’ shall be binding on the Corporate Debtor and other persons, authorities etc.
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