NCLT Appoints Liquidator for Multicity Hospitalities LLP After CoC Votes to End Insolvency Process [Read Order]
The NCLT allowed the application, ordered the liquidation of Multicity Hospitalities LLP, and directed the newly appointed liquidator to take over the process and initiate the liquidation proceedings in accordance with the IBC
NCLT
NCLT
The National Company Law Tribunal (NCLT), Principal Bench in New Delhi, has ordered the liquidation of Multicity Hospitalities LLP after the Committee of Creditors (CoC) voted to end the Corporate Insolvency Resolution Process (CIRP).
The order was passed on an application filed by the Resolution Professional (RP), Mr. Shailesh Chandra Ojha, following the CoC's decision. The CIRP against Multicity Hospitalities LLP was initiated in December 2024 on a petition by its operational creditor, Indo Spirits. Despite multiple meetings and two rounds of inviting Expression of Interest (EOI), no viable resolution plan was submitted by any prospective resolution applicant.
The RP, acting on the CoC's resolution with a 99.31% majority, sought an order for liquidation under Section 33(2) of the Insolvency and Bankruptcy Code (IBC).
The NCLT bench, comprising Justice (Retd.) Ramalingam Sudhakar and Mr. Ravindra Chaturvedi, upheld the CoC's commercial decision as non-justiciable, citing the Supreme Court's precedent in K. Sashidhar. The Tribunal noted that the CoC's decision, approved by a voting share far exceeding the 66% threshold mandated by Section 33(2), could not be interfered with, as doing so would only delay the process and erode the value of the corporate debtor.
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Section 33(2) of the Insolvency and Bankruptcy Code 2016 permits the CoC to resolve to liquidate CD at any point of time during the CIRP. In view of the that , the bench found no reason to accept the commercial decision of the CoC to liquidate the CD, as the same will only delay the closure of the process prescribed under the IBC and erode the value of the CD further, which would not be in conformity with the overall object and intent of the IBC.
However, deviating from the RP's request to be appointed as the liquidator, the NCLT appointed Mr. Mohd Nazim Khan from the IBBI's panel. The Tribunal relied on an IBBI circular recommending that a professional other than the RP be appointed as liquidator.
The NCLT allowed the application, ordered the liquidation of Multicity Hospitalities LLP, and directed the newly appointed liquidator to take over the process and initiate the liquidation proceedings in accordance with the IBC.
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