Pending Avoidance Proceedings Cannot Bar Corporate Debtor’s Liquidation: NCLT Mumbai

In re PCS Vaishali Patrikar (NCLT Mumbai)

The National Company Law Tribunal (NCLT), Mumbai, allowed an application filed by the Resolution Professional under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 (IBC), seeking commencement of the liquidation process of the Corporate Debtor.

The Corporate Debtor was admitted into the Corporate Insolvency Resolution Process (CIRP) by an order dated 06.06.2023 passed under Section 7 of the IBC. An Interim Resolution Professional (IRP) was appointed, who issued a public announcement inviting claims. Four claims from financial creditors and three claims from operational creditors were received. However, only the claim of the original operational creditor, Gajendra Investment Limited, was verified due to the absence of supporting documents for the remaining claims. Consequently, the Committee of Creditors (CoC) was constituted with Gajendra Investment Limited as its sole member.

Following constitution of the CoC, the IRP was replaced by the present Resolution Professional. During the second CoC meeting, the CoC initially resolved that the Corporate Debtor be dissolved without liquidation, following which an application was filed. That application was subsequently withdrawn and disposed of as withdrawn.

Thereafter, the Resolution Professional obtained time to complete valuation of the Corporate Debtor and placed the valuation report on record. A transaction audit was also conducted, which identified transactions falling within Sections 43 and 66(1) of the IBC. An avoidance application in respect of those transactions was filed and remained pending before the Adjudicating Authority.