Insolvency and Bankruptcy Code, 2016 (the Code) primarily focus on resolution of the corporate debtor but where the resolution plan fails as the Committee of Creditors (CoC) do not approve the resolution plan and no othe
CS Professional · Insolvency - Law and Practice · PYQS · December 2022
Insolvency and Bankruptcy Code, 2016 (the Code) primarily focus on resolution of the corporate debtor but where the resolution plan fails as the Committee of Creditors (CoC) do not approve the resolution plan and no other way can be adopted then the ultimate resort is the liquidation and dissolution of the corporate debtor. However, even in the case of liquidation of corporate debtor as held by the Supreme Court the liquidator can sale the business of the corporate debtor as a 'going concern'. The liquidation process under chapter - III of Part - II of the Code is being regulated by the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 and the order of liquidation is also being passed by the Adjudicating Authority (AA). A resolution professional is being appointed by AA to act as liquidator. However, occasions may arise where the appointed liquidator can be threatened and may not be allowed to enter the premises of corporate debtor to carry out his functions or the appointment of the liquidator is challenged by CoC after the order of liquidation is passed by the AA. Despite the order of liquidation the entire assets of the corporate debtor do not constitute liquidation estate assets. Consider the above facts and answer the following questions: Based on the applicable case law(s) state the protection, if any, made available to the liquidator when he is not being allowed to enter the premises of the corporate debtor to carry out his functions with the threat of his life.
Answer & Explanation:
The Liquidator as per section 35 of the Insolvency and Bankruptcy Code, 2016 to ensure orderly completion of the liquidation proceedings has been given powers and duty which includes to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor, to take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary, to carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary. Further section 34 of the Code mandate that the personnel of the corporate debtor shall extend all assistance and cooperation to the liquidator as may be required by him in managing the affairs of the corporate debtor. However, where the liquidator is being opposed to enter into the premises of the corporate debtor by a group/mob of unknown person, hurled threats with weapons, the NCLAT in the case of S. Muthuraju Vs. Commissioner of Police directed the Superintendent of Police to give adequate police protection to the liquidator to enable him to perform his duties.
Topics: Liquidation Process
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