Mr. K Sridhar and Mr. K. Murali are the Directors of M/s S & M Engineering Enterprises Limited (SMEEL). Unfortunately, being the victims of COVID 2019 pandemic, by both the brothers and their respective families, the

Mr. K Sridhar and Mr. K. Murali are the Directors of M/s S & M Engineering Enterprises Limited (SMEEL). Unfortunately, being the victims of COVID 2019 pandemic, by both the brothers and their respective families, they could not concentrate on the day-to-day affairs of the business and in the short run, the top line and the bottom line of the business went southwards and ultimately, they had to face the brunt of huge debts. An application for initiation of Corporate Insolvency Resolution Process (CIRP) against M/s SMEEL under the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) was moved by an 'Assignee' of an Operational Creditor for Non-payment of dues. The Adjudicating Authority admitted the application because there was no intimation of any dispute within the 10 days. After following all the compliances prescribed under the IBC, 2016, the Adjudicating Authority passed an order to Liquidate the Corporate Debtor, on an intimation from the Resolution Professional to do so, as decided by the Committee of Creditors (CoC) by requisite voting, before the approval of the resolution plan. The relevant information related to M/s SMEEL for the purpose of liquidation is produced as follows: Liabilities ₹ in Lakhs Assets ₹ in Lakhs Capital : Fixed Assets : Equity 300 Land and Buildings 350 Preference 200 Plant and Machinery 150 Financial Creditors : Current Assets : Secured 250 Inventories 100 Unsecured 150 Trade Receivables 300 Operational Creditors : Other Current Assets 50 Secured 60 Cash and Cash Equivalents 100 Unsecured 70 Fictitious Assets 190 Government Dues 50 Workmen's Dues 80 Employees Dues 80 Total 1,240 Total 1,240 Other Information : Workmen's dues represent the amounts payable for the period of 30 months preceding the liquidation commencement date. Employee's liability includes ₹ 72 Lakhs outstanding to employees for a period of 12 months, preceding the liquidation commencement date. Land and Buildings would realize 110% of its book value, Plant and Machinery would realize 60% of its book value, net of any realization cost. Inventories and Trade Receivables would realize 72% of its book value. The secured financial creditors worth ₹ 45 Lakhs decided to enforce their security interest in the other current assets and they could realize 80% of its value. There has been a pending court case against the Company for use of child labour which could result in a penalty of approximately ₹ 30 lakhs. This has been reflected as a contingent liability only. It has been finally decided to pay ₹ 25 lakhs and settle the case. Based on the amount realized and distributed, the cost of liquidation and insolvency period cost is computed to be ₹ 20 lakhs and ₹ 12 lakhs respectively. In the light of the above inputs and with reference to the relevant provisions of the IBC, 2016, answer the following questions : Explain distribution of proceeds from the sale of the liquidation assets as per the IBC, 2016.