M/s. BS Limited (In Liquidation) vs BS Ltd

[Per: Bench]

This application is filed by the Liquidator of the Corporate Debtor M/s. BSLimited, seeking closure of the Liquidation process of Corporate Debtor (CD) on account of successful sale of the Corporate Debtor as a going concern.

This Authority admitted the Company Petition filed under Section 7 of the IBC by the State Bank of India, a Financial Creditor, vide an order dated 01.11.2018 and ordered the commencement of the Corporate Insolvency Resolution Process (CIRP) for the CD. Dr. K.V. Srinivas was appointed as the Interim Resolution Professional (IRP) and was later confirmed as the Resolution Professional (RP) for the CD.

Since the RP did not receive any viable plan for the CD, this Authority ordered liquidation of the CD vide Order dated 17.10.2019 and Mr. Yadavalli Sai Karunakar, the Applicant herein, was appointed as the Liquidator for the CD on 25.10.2019.

On 07-11-2019, the Liquidator issued a public announcement in Form-B, inviting claims from stakeholders. After receiving the claims, the Liquidator constituted the Stakeholders Consultation Committee (SCC). Initially, the Liquidator used the values from the valuation reports conducted during the CIRP. Later, in consultation with the SCC, the Liquidator appointed registered valuers to revalue the individual assets at the time of their sale. The details of the fair value and liquidation value are as follows :

On 08.04.2022, the Applicant, with the permission of this Authority, conducted a private sale of the CD’s investment in the equity shares of the joint venture company M/s. Raichur Sholapur Transmission Company Pvt. Ltd. This investment was excluded from the liquidation estate and the remaining estate was put up for sale as a going concern. Additionally, the Applicant conducted auctions of other assets of the CD on various dates and submitted sale reports along with each quarterly progress report detailing the assets sold. Below is a summary of the assets sold from the liquidation estate:

The liquidation value of the estate is Rs. 12,69,19,247/-, while the amount realized from its sale is Rs. 25,03,97,054/-. Additionally, there is a balance of Rs. 2,12,52,121/- in the liquidation account and Rs. 61,72,075/- in interest earned during the liquidation process. The total amount of Rs. 27,78,21,250/-was distributed to stakeholders as per Sections 52 and 53 of the Code within three months of realization, after deducting Rs. 18,84,567/- (unpaid CIRP costs) and Rs. 2,95,73,095/- (total liquidation costs).

It is submitted that after distributing all amounts from the Liquidation Bank Account No. 043702000001979 at Indian Overseas Bank, Lakadikapul Branch, Hyderabad (IFSC Code: IOBA0000437), the account was closed on 03.07.2024.

It is further submitted that till now, the first charge holders have not realized the secured assets handed over to them, the estimated surplus from selling these assets remains unsold. Since it is uncertain that when such unsold Asset will be realized by the first charge holders, the Applicant discussed the matter in the 17th SCC Meeting held on 19.06.2024 and decided to distribute the surplus among the Secured Financial Creditors with the Authority’s approval. Consequently, the Liquidator filed IA No. 1378 of 2024, seeking permission from this Authority to distribute the surplus amount after the realization of the said unsold assets and the same was disposed on 29.07.2024 directing the first charge holders to tender the surplus amount of Rs.96.28 crores to the Liquidation Account.

It is submitted that the following significant litigation proceedings are currently pending before this Authority and the Hon'ble NCLAT:

This application filed for a detailed investigation into the affairs of M/s. BS Limited during its commercial operations was requested from a competent investigation authority to uncover the fraud. As per the directions of the Adjudicating Authority's order dated 08.05.2024, the Liquidator held the 17^thSCC Meeting on 19.06.2024 and sought advice from the SCC on the continuation of IA No. 65 of 2020 after the closure of the Liquidation Process. In this meeting, it was resolved with 95.50% votes that the Secured Financial Creditors would continue to address the fraud matters in IA No. 65 of 2020.

The application, IA. No. 64 of 2020, was filed by the Liquidator against the non-cooperation of the erstwhile Management, Resolution Professional, and Lenders. On 07.05.2021, this Authority rejected IA No. 64 of 2020 without addressing the concealed assets worth over Rs. 100 crores. Consequently, the Liquidator challenged this rejection order before the Hon’ble NCLAT, Chennai, via CA(AT) (Ins) No. 141 of 2021.

The application, IA No. 1148 of 2020, was filed by IFCI, Bank of India, Punjab National Bank, IDBI Bank, Canara Bank, and Laxmi Vilas Bank, seeking the removal and replacement of the current Liquidator. This application was rejected on 07.01.2021. Subsequently, the Bank of India and others appealed against this decision before the Hon’ble NCLAT, Chennai, via CA(AT) (Ins) No. 28 of 2021.

The pending cases CA(AT) (Ins) No. 141 of 2021 and CA(AT) (Ins) No. 28 of 2021 before the Hon'ble NCLAT, Chennai, may become infructuous after the closure of the Liquidation Process. The Secured Financial Creditors will continue to address the IA No. 323 of 2019 and IA No. 65 of 2020 on a cost sharing basis.

Along with the application the Applicant has submitted the Final Report of the Liquidation Process,Compliance Certificate in Form-H, Liquidation Bank Account statement showing zero balanceand Audited receipts & payments Account from the date of commencement of the Liquidation till date.

It is submitted that since the entire sale proceeds have concluded with the distribution of the funds amongst the creditors of the CD, the Applicant is seeking closure of the Liquidation proceedings against the CD.

We heard the Counsel for the Applicant and perused the all the documents place on record.

Now, it is important to look into the Regulation 45(3)(a) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The saidprovision reads as under:-

Upon perusal of the Final Report of liquidation process (Annexure 1) and Form H – compliance certificate (Annexure 2), it is evident that the Liquidator has sold the CD as a going concern with the consent of SCC, as such it is a fit case forclosure of Liquidation process.

As a sequel to the above, we hereby order closure of the Liquidationproceedings against the CD viz. M/S. BS Limited from the date of this Order, in termsof Regulation 45(3) of Insolvency Bankruptcy Board of India (Liquidation Process) Regulations, 2016. Consequently, the Liquidatorstands relieved.

The Liquidator is directed to send the copy of this Order within 7 daysfrom the date of pronouncement to the Registrar of Companies,Hyderabad and the concerned authorities and hand over all the books and files of the CD M/S. BS Limited which are in possession of the Liquidator to thesuccessful bidder i.e. M/S. Vasavi Realty Private Limited.

The Registry is directed to communicate this order to the Registrar of Companies, Hyderabad and concerned authorities for updating the master data.

A copy of this order be also forwarded to the Insolvency BankruptcyBoard of India, New Delhi.

Certified Copy of this order may be issued, if applied for, upon compliance of all requisite formalities.

In terms of the above, this application is allowed and stands disposed of accordingly.