Concept Group vs Cns Fashions Retail Pvt Ltd

IA-3/ND/2025: The present Application has been filed by the Liquidator of the Corporate Debtor, M/s. CNS Fashion Retail Private Limited under Section 54 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, seeking early dissolution of the Corporate Debtor. The prayer made in the captioned Application reads thus:-

Our attention is drawn to the 2nd meeting of the Stakeholders’ Consultation Committee (SCC) held on 04.07.2024, wherein the members of the SCC resolved that since no assets were available in the Corporate Debtor, the Applicant should file an Application under Section 54 of the Code read with Regulation 14 of the Liquidation Process Regulations, seeking early dissolution of the Corporate Debtor and also give the reasons for seeking such early dissolution. The said agenda was approved by the members of the SCC with 100% assent. The relevant excerpt of the agendas of the said meeting reads thus:-

As can be seen from Section 54 of IBC, 2016, where the assets of the corporate debtor have been completely liquidated, the liquidator should make an application to the Adjudicating Authority for the dissolution of the corporate debtor and the Adjudicating Authority shall on application being filed by the Liquidator, dissolve the corporate debtor. The Section 54 reads thus:-

It is also pertinent to refer to Regulation 14 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, which provides for early dissolution of the Corporate Debtor in appropriate cases. The said Regulation reads thus:-

Our attention is drawn to the Form H filed in terms of Regulation 45(3) of the IBBI (Liquidation Process) Regulations, 2016. It is seen from the said Form H that there were no assets of the Corporate Debtor available for sale. It is also seen that the amount realized during the liquidation process consisted only the balance recovered from the bank accounts of the Corporate Debtor, amounting to INR 17,881/-. Form H also contains the details of the claims of the members of the Stakeholders’ Consultation Committee. The relevant excerpt of Form H reads thus:-

As there are no tangible assets nor Fixed Assets nor Debtors and no Asset-wise sale can be done, as only “accumulated losses” are there in the Balance Sheet, which neither can be “valued” nor “sold”.

There are no assets of the Corporate Debtor/ the Corporate Debtor did not have any Land and Building nor Plant and Machinery nor any movables/ vehicles nor any debtors and even the GST input credit” was elapsed / could not be utilizable and the available Current Assets/ old stocks of garments had already been sold / disposed off by the Resolution Professional Mr Soni during the CIRP Process.

The liquidation estate of the Corporate Debtor only consisted of the bank accounts of the Corporate Debtor, which at the time of passing of the liquidation order had a cumulative balance of INR 17881(out of which Rs 289 was transferred from Kotak Bank on 8th October 2024 and Rs 17592 was transferred from AXIS Bank on 30th November 2024 after they removed lien from the account after much efforts by the Liquidator)

Rs 10,10,499 as per Valuations done in CIRP Period.

Note: Whatever fixed assets the company had, were primarily some Current Assets/ inventory/ old stocks of Garments, which were sold / disposed off by the Resolution Professional Mr Soni during the CIRP Process. Thus till the Liquidation Process started the company did not have any Fixed Assets/ Current Assets.

It is submitted that THE INVENTORY (that is mentioned in the CIRP Valuation Reports) HAD ALREADY BEEN SOLD DURING CIRP PROCESS BY THE RESOLUTION PROFESSIONAL, THUS THE ABOVE VALUE IS NOT REALIZABLE DURING THE LIQUIDATION PROCESS AND THE VALUE OF THE SAME MAY BE CONSIDERED AS "NIL"

There are no assets of the Corporate Debtor/ the Corporate Debtor did not have any Land and Building nor Plant and Machinery nor any movables/ vehicles nor any debtors and even the GST input credit” was elapsed / could not be utilizable and the available Current Assets/ old stocks of garments had already been sold / disposed off by the Resolution Professional Mr Soni during the CIRP Process.

As can be seen from the Final Report prepared by the Liquidator in terms of Regulation 45 (ibid.), no assets of the Corporate Debtor were available for sale or liquidation.

We are conscious of the fact that the facts and circumstances of the present case indicate that no useful purpose would be served by continuing the Corporate Debtor in the liquidation process under the provisions of the Code, particularly when the Corporate Debtor has no realizable assets.

It is not gainsaid that the ultimate objective of the Code is either to resolve the insolvency of the Corporate Debtor by way of an approved Resolution Plan or where resolution is not feasible, to ensure its dissolution in an expeditious manner so as to maximize the value of assets and balance the interests of stakeholders. The facts of the present case shows that continuation of the insolvency or liquidation process would serve no practical purpose and therefore, this Adjudicating Authority in exercise of its jurisdiction under the Code read with Rule 11 of the National Company Law Tribunal Rules, 2016, may pass such appropriate orders as may be necessary in the interest of justice and for timely conclusion of proceedings.

As regards the issue of bearing the costs incurred towards conducting the Corporate Insolvency Resolution Process and the liquidation process in a case where no assets are available with the Corporate Debtor, is concerned, it is apposite to refer to our order dated 15.01.2025, wherein it was specifically directed that the creditors, irrespective of whether they are related parties, shall bear the liquidation costs as determined in accordance with law. It is further clarified that the said direction shall also extend to the unpaid CIRP costs, if any, which remain outstanding for appropriate treatment. The order dated 15.01.2025 reads thus:-

It is clarified that dissolution of the Corporate Debtor shall not, in any manner, absolve the Promoters/Directors of the Corporate Debtor from any personal liability or guarantee furnished in respect of the Corporate Debtor under any law for the time being in force.

In view of the Final Report and the certificate furnished in Form H, it is clear that there are no assets of the Corporate Debtor available for distribution and no liquidation proceeds capable of being disbursed amongst the creditors are there. Accordingly, no useful purpose would be served in keeping the liquidation process pending. Therefore, in exercise of powers conferred under Section 54(2) of the Insolvency and Bankruptcy Code, 2016, the Corporate Debtor, M/s. CNS Fashion Retail Private Limited, is hereby dissolved.

The Liquidator shall forward a copy of this Order passed under Section 54(2) of the Code, to the concerned Registrar of Companies / Regional Director and IBBI within seven days from the date of this Order.

The Liquidator shall comply with the provisions of Regulation 45A of the IBBI (Liquidation Process) Regulations, 2016. The present Application stands disposed of.