NCLT Sanctions Fee for Outgoing Liquidator and Professionals under Regulation 34B of IBBI, Citing Regulatory Minimum and Services Rendered [Read Order]

The Cochin bench of the National Company Law Tribunal (NCLT) sanctioned a monthly fee of Rs. 2 lakh for the outgoing Liquidator of M/s Asten Pvt. Ltd., along with professional costs incurred for accounting and secretarial services. Noting that the services had been duly rendered and that the admitted claims exceeded Rs. 200 Crores, the NCLT held that the Liquidator was entitled to the minimum fee prescribed under the regulations.

M/s Asten Pvt. Ltd. underwent liquidation following the Adjudicating Authority’s order dated 19.11.2024, after approval of resolution plans for certain projects. The outgoing Liquidator, Sri K.C. Padmakumar, was appointed from the panel of Insolvency Professionals and conducted the liquidation process, which included public announcement of claims, collation of stakeholder claims, and appointment of professionals, such as a Chartered Accountant and secretarial assistance, to assist in the process.

The Corporate Debtor had admitted claims totalling Rs. 204.10 Crores, placing it within the range where IBBI regulations prescribe minimum fees for insolvency professionals.

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During the process, the SCC (Stakeholders Consultation Committee), responsible for guiding liquidation decisions, did not approve the proposed fees for the Liquidator and his appointed professionals.

Separately, due to a lack of consensus on liquidation cost estimates, the SCC passed a resolution with a 94.30% majority recommending the replacement of the existing Liquidator with Sri Sreenivasan P.R., an Insolvency Professional registered under IBBI. The SCC recorded the reasons for this recommendation in accordance with Regulation 31A(11) of the IBBI (Liquidation Process) Regulations, 2016.

The outgoing Liquidator and professionals had served during the liquidation period until the SCC passed the replacement resolution. While the SCC’s vote did not approve remuneration, the Liquidator sought sanction of fees in line with regulatory provisions.

These facts formed the basis for the NCLT to consider both the replacement of the Liquidator and the sanctioning of fees and professional costs, ensuring compliance with the IBC, 2016, and IBBI regulations while recognising the commercial wisdom of creditors.

In the matter concerning the sanctioning of fees and professional costs, the appellant contended that the Liquidator and the appointed professionals are entitled to remuneration as per regulatory provisions, irrespective of SCC approval, for services rendered during the liquidation process.

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Also, the minimum fee prescribed under Regulation 34B of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, for claims between Rs. 50 Crores and Rs. 500 Crores is Rs. 2 lakh per month, and this should apply to the outgoing Liquidator, given that admitted claims totalled Rs. 204.10 Crores. It was further argued that fees for professionals are part of the liquidation cost as per Section 35(1)(i) of IBC and Regulation 7(1) of Liquidation Process Regulations, 2016.

The Tribunal examined the relevant provisions. Regulation 34B provides a minimum fee for interim and resolution professionals based on the admitted claim amount. The outgoing Liquidator handled claims exceeding Rs. 50 Crores, making the Rs. 2 lakh fee reasonable. Section 35(1)(i) of IBC and Regulation 7(1) authorise the Liquidator to appoint professionals for reasonable remuneration, which forms part of the liquidation cost.

It was observed that the SCC’s rejection of the fees lacked deliberation and specific reasons, failing the due application of mind required under the regulations. Also, payment is sanctioned for the period the Liquidator and professionals actually rendered their services, subject to the furnishing of invoices or proof to the SCC.

The two-member bench of Madhu Sinha (Technical Member) and Vinay Goel (Judicial Member) sanctioned Rs. 2 lakh per month to the outgoing Liquidator for the period served. Also, approved professional fees of Rs. 10,000/month for the Chartered Accountant and Rs. 15,000/month for secretarial assistance, subject to proof of service.

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