NCLT Kolkata Stresses Liquidation As Last Resort, Emphasizes Broader Public Interest In Corporate Insolvency Resolution

NCLT Kolkata Stresses Liquidation As Last Resort, Emphasizes Broader Public Interest In Corporate Insolvency Resolution

The National Company Law Tribunal (NCLT) Kolkata bench, consisting of Bidisha Banerjee (Judicial Member) and Balraj Joshi (Technical Member), has emphasized that liquidation should be considered only as a measure of last resort. The Tribunal underscored that the Insolvency and Bankruptcy Code (IBC) aims to address a broader public interest in resolving corporate insolvencies, extending beyond mere debt recovery to maximizing asset value.

The case involved Nandini Impex, a corporate debtor admitted to the Corporate Insolvency Resolution Process (CIRP). Following the admission, an appeal to the NCLAT Delhi was disposed of. A public announcement and invitation for Expressions of Interest (EOI) were issued, attracting interest from several applicants. However, only Mideast Pipeline Products submitted a resolution plan, which was found inadequate by the Committee of Creditors (CoC) and required revision.

Despite multiple opportunities to revise the plan, Mideast’s proposals were rejected, and the CoC decided to move towards liquidation. Mideast later attempted to submit a revised plan after the decision to liquidate was made. The Resolution Professional (RP) contended that Mideast’s submission was delayed and argued against reconsideration, citing the time-bound nature of the insolvency process.

The NCLT referred to the Supreme Court's decision in Ebix Singapore Private Limited v. Committee of creditors of Educomp Solutions Limited, highlighting the need for resolution plans to be credible and time-bound without undue speculation. It also referenced the Ahmedabad Bench's ruling in M2K Developers Pvt Ltd v. Ramchand Choudhary RP of Anil Mega Food Park Pvt Ltd, which noted that conditional resolution plans are not permissible under the IBC.

Additionally, the NCLT considered the Supreme Court's view in Kridhan Infrastructure Pvt. Ltd. v. Venkatesan Sankaranarayan & Ors., which emphasized liquidation as a last resort and the IBC's focus on maximizing asset value.

The NCLT concluded that proceeding with liquidation for Nandini Impex would not align with the broader objectives of the IBC. The Tribunal directed the CoC to renegotiate with Mideast Pipeline Products regarding its revised offer, ensuring that any conditions that could impede the resolution process are removed.