Encore Asset Reconstruction Company Private Limited vs Three Leaf Foods Private Limited

Per: Coram

It is an application filed u/s 33(1) of the Insolvency and Bankruptcy Code, 2016 (Code) by Prajakta Menezes, Resolution Professional (RP) of Three Leaf Foods Private Limited (Corporate Debtor) seeking liquidation order based on the resolution passed by the CoC in its 3^rd meeting held 17.01.2024

On perusal of this application, it appears that CP No. (IB)-768 of 2022 was admitted by this Tribunal on 18.08.2023 and Prajakta Menezes was appointed as Interim Resolution Professional (IRP).

The Applicant published requisite Form A as per Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 on 20.08.2023 in the Times of India (English Newspaper) and Dainik Ekmat (Marathi Newspaper) intimating commencement of CIRP and inviting claims from the Creditors of the Corporate Debtor.

Post verification of claims, the Committee of Creditors was constituted of Encore Asset Reconstruction Company Private Limited as sole CoC member and the same was intimated to the bench vide Interlocutory Application (IA) No. 4321 of 2023 and the said IA was allowed vide order dated 11.10.2023.

In the first CoC meeting on 09.08.2023, the CoC confirmed the Applicant's continuation as the Resolution Professional (RP). The RP informed the CoC that during a factory visit on 28.08.2023, the facility was found locked and management disclosed that all plant and machinery already had been sold. The Applicant further stated that, as required by the Code, two Registered Valuers must be appointed to assess the fair value and liquidation value of the Corporate Debtor's assets. However, no information regarding the assets was available as of the Insolvency Commencement date.

In the second CoC meeting on 13.10.2023, the Applicant informed the CoC about the need to publish Form G for Expressions of Interest (EOI), which was approved. The suspended management confirmed that the plant, machinery, and inventory were sold before the CIRP, leaving only the land and building. The CoC then approved the appointment of two Registered Valuers to assess the asset values.

In the third CoC meeting on 17.01.2024, the Applicant informed the CoC that only one EOI was received from Mount Securities Limited, but no Resolution Plan was submitted by the said entity, nor did they request any additional time to submit the plan, indicating a lack of interest. In view of the above, the CoC deliberated that given the absence of a Resolution Plan and no further EOIs were expected, the CoC proposed liquidating the Corporate Debtor, as per Section 33 of the IBC. The Applicant also completed the necessary compliances under Regulations 39B, 39BA, 39C, and 39D of the CIRP Regulations. Further, Aegis Resolution Services Private Limited an Insolvency Professional entity having IIBI registration No. IBBI/IPE-0118/IPA-1/2022-23/50041 has been approved to be appointed as Liquidator of the Corporate Debtor

We have considered the arguments presented by the learned Counsel for the Applicant and thoroughly reviewed the material available on record. It was noted that the Company had not been operational in the last year, and the last available balance sheet pertaining to the financial year 2014-15. The Company does not possess any assets except land and a building. Additionally, apart from one EOI, no further EOIs were received, and, therefore, no Resolution Plan was submitted. As a result, the Applicant was unable to proceed with the Corporate Insolvency Resolution Process (CIRP).

In light of these circumstances, and in accordance with the unanimous decision of the Committee of Creditors (CoC), the CoC opted for the liquidation of the Corporate Debtor. The extract of the relevant resolution by the CoC in its 3^rd Meeting held on 17.01.2024 is being reproduced herein below:

In view of the above facts and circumstances of this case and the resolution passed by the CoC, this Bench is of the opinion that the Corporate Debtor is required to be liquidated in the manner as laid down under the Insolvency & Bankruptcy Code, 2016. Hence, we pass the following orders:

a. The Aegis Resolution Services Private Limited, holding Registration No. IBBI/IPE-0118/IPA-1/2022-23/50041, is appointed as the Liquidator in terms of Section 34 of the Code;

b. Registry is directed to communicate this Order to the Registrar of Companies, Mumbai and to the Insolvency and Bankruptcy Board of India;

c. The Order of Moratorium passed under Section 14 of the Insolvency and Bankruptcy Code, 2016 shall cease to have its effect and a fresh Moratorium under Section 33(5) of the Insolvency and Bankruptcy Code shall commence;

d. This order shall be deemed to be a notice of discharge to the officers, employees and workmen of the corporate debtor as per Section 33(7) of the Insolvency and Bankruptcy Code, 2016;

e. The Liquidator is directed to proceed with the process of liquidation in a manner laid down in Chapter III of Part II of the Insolvency and Bankruptcy Code, 2016 and in accordance with the relevant rules and regulations.

f. The Liquidator shall follow upon and continue to investigate the financial affairs of the Corporate Debtor in accordance with provisions of Section 35(1) of the Code.

g. The liquidator shall also follow up the pending applications for their disposal during the process of liquidation including initiation of steps for recovery of dues of the Corporate Debtor if any as per law.

h. The Liquidator shall submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date as per Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016;

Copy of this order be sent to the financial creditors, corporate debtor, the Liquidator for taking necessary steps.

The IA- 18/2024 filed by the RP for Liquidation of the Corporate Debtor stands allowed accordingly in aforesaid terms.