Liquidator must not Restrict Sale of Corporate Debtor's Assets through Private Sale to Single Buyer, Should Attract Multiple Buyers: NCLT [Read Order]
The Tribunal reaffirmed that the IBC is meant to be a method for resolving the Corporate Debtor, not a procedure for collecting debt
![Liquidator must not Restrict Sale of Corporate Debtors Assets through Private Sale to Single Buyer, Should Attract Multiple Buyers: NCLT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/NCLT-Corporate-Debtor-NCLT-Mumbai-corporate-debtor-asset-sale-TAXSCAN.jpg "Liquidator must not Restrict Sale of Corporate Debtors Assets through Private Sale to Single Buyer, Should Attract Multiple Buyers: NCLT [Read Order]")
The National Company Law Tribunal (NCLT) Mumbai bench has held that the Liquidator must not restrict the private sale to a single buyer but should strategize to attract the maximum number of buyers to maximize realization from the asset sale. Read More: Excise Duty not leviable by Student Almanac and Teacher Planner: CESTAT On November 23, 2017, an order was issued admitting the...
The National Company Law Tribunal (NCLT) Mumbai bench has held that the Liquidator must not restrict the private sale to a single buyer but should strategize to attract the maximum number of buyers to maximize realization from the asset sale.
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On November 23, 2017, an order was issued admitting the corporate debtor to the Corporate Insolvency Resolution Process (CIRP). However, in accordance with an order dated 07.10.2020, the Adjudicating Authority ordered liquidation, appointing the Applicant as the Liquidator of the Corporate Debtor, since the Committee of Creditors (CoC) had not accepted any Resolution Plans.
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The Stakeholders' Consultation Committee (SCC) and the applicant then agreed that the asset in question should be classified as Not Readily Realisable Assets (NRRA) in accordance with Regulation 37A of the Liquidation Process Regulations. No offers were made for the aforementioned asset when it was put up for public auction on July 20, 2024, under the NRRA.
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There were two public announcements as an NRRA. Bhubnesh Commercial Private Limited made an offer of Rs. 27,35,000 in the second public announcement, which was issued on September 5, 2024. Amrex Marketing Private Limited, its partner business, later changed this offer to Rs. 35,000,000. Rs. 3,00,000 in Earnest Deposit Money (EMD) has been deposited by Amrex Marketing Private Limited.
The offer was reviewed at the SCC meeting on October 10, 2024, and it was submitted to a vote between October 17 and November 27, 2024. However, 30.78% of voters cast ballots against it, 592 percent did not cast a ballot, and 63.70% voted in favor. The applicant submitted the current application in order to obtain the Adjudicating Authority's approval for the private sale in favor of Amrex Marketing Private Limited.
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The applicant stated that although they have tried their best to sell the corporate debtor's assets, they have not been successful as of yet. This indicates that the traditional auction approach is not well-liked by the market, which makes a private sale or other alternative mechanism necessary to realize assets.
The Tribunal observed that the reserve price at the most recent unsuccessful auction was ₹71,76,839/-. The current offer is substantially less. Furthermore, in accordance with Regulation 32A(9) of the Liquidation Process Regulations, the proposal for a private sale at Rs 35,000,000 was denied since it did not have the necessary majority.
The bench of Shri Anil Raj Chellan (Judicial Member) and Shri K. R. Saji Kumar (Technical Member) observed that the Liquidation Regulations provides for certain checks and balances on the private sale as outlined in schedule I which includes strategizing to attract buyers, liaising with potential purchasers or their agents, completion of sale in accordance with the terms of sale etc. The process of conducting the private sale must aim to maximise the realisations from the sale of the assets.
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According to the Tribunal, there is no proof in the file that the applicant developed a plan to draw bidders for a private sale in order to maximize asset realization. Furthermore, the asset's liquidation value has not been shown to support the ₹35,000,000/-offer. Consequently, the liquidator was instructed under section 35 of the code, and the private sale at this price cannot be permitted.
While dismissing the tribunal held that to solicit bids above Amrex Marketing Private Ltd.'s offer, the liquidator will publish a new notice of sale in two extensively read publications. Amrex's bid will serve as the anchor bid when the Swiss Challenge Method is applied. Ten percent of the offer value must be submitted as EMD by interested bidders. Amrex Marketing Private Ltd. may choose to match a better bid if one is received.
To Read the full text of the Order CLICK HERE
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