Small Industries Development Bank Of India vs M/s. Vyshnavi Spices LLP

Pass an order for liquidation of the Corporate Debtor under Section 33(2) of the Code;

Appoint Smt. Ramanathan Bhuvaneshwari (IP Registration No. IBBI/IPA-002/IP-N00306/2017-18/10864), as the Liquidator of the Corporate Debtor;

Pass such other and further orders as this Adjudicating Authority may deem fit and proper in the facts and circumstances of the case.

A Petition bearing no. CP(IB)/66/7/AMR/2024 for initiation of the Corporate Insolvency Resolution Process (hereinafter referred to as the "CIRP") was filed by Small Industries Development Bank of India (hereinafter referred to as the "Financial Creditor" or "SIDBI") under Section 7 of the IBC, read with Rule 6 of the

Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, wherein this Adjudicating Authority vide its Order dated 06.06.2025 admitted the Corporate Debtor into Corporate Insolvency Resolution Process (hereinafter referred to as the “CIRP”) and appointed the Applicant as the Interim Resolution Professional (hereinafter referred to as the “IRP”).

The Applicant made the public announcement in Form-A under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as the “CIRP Regulations”) on 09.06.2025 in ‘Eenadu’ (Guntur, Vijayawada, and Ongole editions) in Telugu and ‘The Times of India’ in English inviting the claims by 20.06.2025.

Pursuant to the public announcement, following claims were received:

In compliance with Regulation 13 of the CIRP Regulations, the claim received were verified, the list of creditors was finalized and a report on the constitution of the Committee of Creditors (hereinafter referred to as the "CoC") under Regulation 17(1) of the CIRP Regulations was filed by the IRP vide IA No. 185/2025, which was taken on record by this Adjudicating Authority vide its Order dated 18.07.2025.

In the (1^st) meeting of the CoC, the Applicant was confirmed as the RP in accordance with the provisions of Section 22(2) of the IBC.

The Corporate Debtor is a Limited Liability Partnership (hereinafter referred to as the "LLP"), incorporated on 10.03.2018 under the provisions of the LLP Act, 2008. As per the statutory requirements, the Corporate Debtor was obligated to file Annual Returns and Statements of Accounts and Solvency with the Ministry of Corporate Affairs (hereinafter referred to as the "MCA") for every financial year. However, upon verification of the records available on the MCA portal^{11.Copy of Master Data of the Corporate Debtor is at Page 117 and 118 of the Application.}, it was observed that the Corporate Debtor has not filed any annual returns or financial statements since its incorporation.

In view of the continued non-cooperation and failure to furnish the requisite books of accounts, financial records, and other relevant documents, the Applicant filed IA No. 254/2025 under Section 19(2) of the IBC, before this Adjudicating Authority, seeking appropriate directions against the suspended Designated Partners. Pursuant thereto, the suspended Partners of the Corporate Debtor submitted the Tally data backup and files to the RP.

Based on the information available, the RP, after due consultation with the sole member of the CoC, SIDBI, appointed M/s KKM & Associates as the Auditor to audit the accounts of the Corporate Debtor for the period from financial year 2018-2019 till the date of commencement of CIRP, who prepared and compiled the financial statements^{22.Copy of Audited Financial Statements for the FY 2018-19 to 2024-25 and Provisional Balance sheet as on CIRP commencement date 06.06.2025 of the Corporate Debtor are at Pages 119 to 169 of the Application.} of the Corporate Debtor from the date of incorporation till the commencement of the CIRP.

The Applicant in compliance with the provisions of the Code and the applicable Regulations, filed progress reports, which periodically apprised the status and developments of the CIRP, including, inter alia, the constitution of the CoC, conduct of CoC meetings, invitation of Expression of Interest (hereinafter referred to as the “Eol”), receipt and evaluation of Resolution Plans, and other material steps undertaken during the CIRP.

The Information Memorandum, prepared under Regulation 36 of the CIRP Regulations, was placed before the CoC in its 4^th meeting held on 03.10.2025, wherein the RP also informed that the valuation of the Corporate Debtor’s assets had been completed by two Registered Valuers appointed under Regulation 35(1) of the CIRP Regulations, determining the fair value and liquidation value of the Corporate Debtor. The valuation reports were collated and averaged in accordance with the applicable regulations to determine the final fair value and liquidation value, which were duly placed before the CoC for deliberation and record.

The RP convened the 5th meeting of the CoC on 16.10.2025, wherein the eligibility criteria and the detailed Invitation for EoI were presented and duly approved by the CoC.

The RP published the Form-G on 18.10.2025 in 'Eenadu' (Guntur and Ongole editions) and 'The Times of India' (Guntur and Ongole editions), inviting EoI from Prospective Resolution Applicants (hereinafter referred to as the "PRA") with the last date for submission of the EoI as 02.11.2025.

The RP received six EoIs, out of which five were found eligible and accordingly, declared as PRAs on 10.11.2025. Upon issuance of the Request for Resolution Plans (hereinafter referred to as the "RFRP"), two Resolution Plans^{33.Copy of Resolution Plans received from the Resolution Applicants are at Pages 170 to 274 of the Application.} were received from Mr. Araga Sai Siddhartha Reddy and Mr. Madireddy Sandeep Reddy within the stipulated timelines prescribed under the Code and CIRP Regulations.

Upon receipt of the Resolution Plans, the RP undertook a detailed scrutiny and verification to ascertain their compliance with the provisions of the Code, the CIRP Regulations, and the terms and conditions of the RFRP, including, inter alia, eligibility under Section 29A of the Code.

The RP conducted a comparative analysis of the Resolution Plans strictly in accordance with the Evaluation Matrix as approved by the CoC. Upon finding the Resolution Plans compliant, the same were placed before the CoC for its consideration, evaluation, deliberation, and decision in accordance with the Code.

The Resolution Applicants were given an opportunity to present their Plans and clarify queries. After due deliberations, the CoC found the Resolution Plan submitted by Mr. Maddireddy Sandeep Reddy to be non-feasible and non-compliant, inter alia, due to lack of industry expertise and a proposal for sale of factory land contrary to the Information Memorandum terms. The Resolution Plan submitted by Mr. Araga Sai Siddhartha Reddy was also found to be non-feasible and non-viable. Both these Resolution Plans were put to vote, and the sole CoC member holding 100% voting share rejected both the Resolution Plans. The CoC communicated its decision to reject the Resolution Plans vide email dated 18.03.2026; and the same was conveyed to the Resolution Applicants. The Earnest Money Deposits were subsequently refunded upon receipt of acknowledgements.

In view of the rejection of the Resolution Plans and the CoC's conclusion that no further viable resolution is possible; the CoC, in its commercial wisdom, in its 11th meeting held on 26.03.2026, passed a resolution with 100% voting share to liquidate the Corporate Debtor under Section 33(2) of the Code and authorised the RP to file the present Application. The CoC further resolved to propose the appointment of Smt. Ramanathan Bhuvaneshwari as Liquidator, who has consented to act as such. It was also resolved that the Stakeholders' Consultation Committee (hereinafter referred to as the "SCC") shall fix her fee.

The CoC in its 11th meeting, in compliance with the provisions of the Code and the CIRP Regulations, has duly considered and approved all requisite matters pertaining to the liquidation.

In terms of Regulation 39B of the CIRP Regulations, the CoC has made a best estimate of the liquidation costs, including Liquidator's fee, public announcement, valuation, security, legal and other incidental expenses, and approved the same, with provision for contribution by the sole Financial Creditor, if required.

Further, in accordance with Regulation 39D of CIRP Regulations, the CoC has resolved that the fee of the Liquidator shall be fixed by the SCC in its first meeting, and such fee and expenses shall form part of the liquidation cost.

The CoC has also complied with Regulation 39BA of the CIRP Regulations by assessing the possibility of compromise or arrangement under Section 230 of the Companies Act, 2013, and has resolved that such options may be explored during the liquidation process in accordance with law.

All the aforesaid resolutions were passed after due deliberations and form an integral part of the CoC's decision to proceed with liquidation under Section 33(2) of the IBC, 2016 ensuring full compliance with the statutory framework governing the liquidation process.

The Moratorium under Section 14 of the Code shall cease to have effect from the date of this order and a fresh moratorium under Section 33(1)(b)(iv) of the Code shall commence.

Mr. Golla Ramakantha Rao having Registration No. IBBI/IPA-003/IP-N00310/2020-2021/13364, is hereby appointed as the Liquidator of the Corporate Debtor for the liquidation process in accordance with Section 34 and other provisions of the Code, the Liquidation Regulations, and other applicable laws, as amended from time to time.

The Liquidator shall make a public announcement stating that the Corporate Debtor is in liquidation, in terms of Section 33(1)(b)(ii) of the Code.

No suit or other legal proceeding shall be commenced, or if pending at the date of the liquidation order, shall be proceeded with by the liquidator, on behalf of the corporate debtor, except with the leave of the Adjudicating Authority and subject to such terms as the Adjudicating Authority may impose.

The order for liquidation under this section shall be deemed to be a notice of discharge to the officers, employees and workmen of the corporate debtor, except when the business of the corporate debtor is continued during the liquidation process by the liquidator.

It is noted that the Corporate Debtor had secured the lease of land comprising 2.6 acres situated at Survey No.785, Bodduvari Palem, Medarmetla Village from Sri Sai Siddhartha Reddy, a suspended Designated Partner of the Corporate Debtor under a Lease Agreement for a period of 20 years commencing from 17.09.2018 to 16.09.2038, however, the aforesaid land is not reflected in the Balance Sheet of the Corporate Debtor prepared by the RP. It is noted that the leasehold rights of a land is treated as the assets of the Company as per the relevant Accounting Standards, the Liquidator is directed to clarify examine the same in the Preliminary Report filed under Regulation 13 of the Liquidation Regulations.

The Liquidator shall prepare the audited balance sheet as on Liquidation commencement date along with the reconciliation of assets reflected in the balance sheet with those considered in the valuation reports and the reconciliation of liabilities reflected in the balance sheet with those considered by the Liquidator and file the same along with the First Progress Report.

It is observed from the counter dated 14.10.2025 filed by the suspended Designated Partners in IA 254/2025 that there have been various transactions having significant value, which may result into avoidance transactions or fraudulent or wrongful trading. It is further noted from the Minutes of the CoC Meetings that the Transaction Audit Report has also not been discussed in detail in any of the meetings of the CoC. In view of the above, the Liquidator is directed to examine the Transaction Audit Report and file the appropriate application under Section 43, 45, 50 or 66 of the IBC, if required.

The CoC and the Liquidator shall ensure that the liquidation process of the Corporate Debtor is completed within the estimated liquidation cost of Rs.10,00,000/-, as approved by the CoC, which includes liquidation costs, including Liquidator fee, public announcement, valuation, security, legal expenses and other liquidation expenses.

The Liquidator shall charge such fee for conduct of the liquidation proceedings as prescribed under Section 34(8) of the Code.