Srei Equipment Finance Limited vs Sky Infra Logistics Private Limited

To initiate Liquidation Process of Sky Infra Logistics Private Limited;

Direct the Financial Creditor, being SREI Equipment Finance Limited to contribute the excess of the Liquidation cost over the Liquid assets of the Corporate Debtor as estimated by him, in proportion to the financial debts owed to them by the Corporate Debtor in accordance with regulation 2A(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016;

To appoint Mr. Dharmendra Kumar, an Insolvency Professional bearing Registration No. IBBI/IPA-003/IP-N000112/2017-18/11264 to act as the Liquidator of the Corporate Debtor herein;

Any other or further order(s) as this Tribunal may deem fit and proper.

This application was filed by Financial Creditor (in short “FC”), i.e., Srei Equipment Finance Limited against the Corporate Debtor (in short “CD”), i.e., Sky Infra Logistics Private Limited, under Section 7 of IBC, 2016 for initiating Corporate Insolvency Resolution Process (in short “CIRP”) along with moratorium under Section 14 of the Code against Sky Infra Logistics Private Limited, the Corporate Debtor (CD) was commenced on 01^st May, 2024 passed by this Tribunal, wherein the Applicant was appointed as the Interim Resolution professional (in short “IRP”).

The Financial Creditor was the only one to file their claim within the stipulated time period. Accordingly, the Committee of Creditors ("CoC") was constituted with the said Financial Creditor being the sole member. The First meeting of the CoC was held on 27th May, 2024 when the CoC confirmed the appointment of the applicant as Resolution Professional of the Corporate Debtor.

The Applicant could only collect data that was available with the Financial Creditor and records available at the official website of the Ministry of Corporate Affairs, viz., Financial Statements, Information regarding Director, Shareholders, etc. The last Financial Statement was obtained from the official website of the Ministry of Corporate Affairs for the Financial Year 2019-20. No details/records/books of accounts etc., could be obtained thereafter. One of the suspended directors being Krishan Kumar Sharma shrugged his responsibility by stating that no balance sheet has been prepared for the past three years due to non- availability of fund and infrastructure. Despite his best possible endeavours, the Applicant has not been able to get in touch with the other director, namely, Mr. Biswanath Shaw till date and he is deliberately evading his statutory duties with mala fide intent. The suspended directors have not extended any effective cooperation to the applicant. Due to such non-cooperation, the applicant has filed an application under Section 19(2) of the said Code, 2016 being IA No. 1185/KB/2024. In the said application, the Respondents had neither appeared in the matter since nor did they file any reply affidavit.

The applicant obtained copies of bank statements from the Bank of Baroda, where the corporate debtor maintains its account for the period from 01.04.14 to 31.03.20 and 01.04.20 to 13.05.24. With the available documents the applicant had conducted a preliminary investigation apropos the transactions entered into by the Respondents in the corporate debtor during the review period. After such investigation, the RP has formed an opinion that the suspended directors entered into fraudulent transactions before initiation of CIRP. The RP appointed auditors to conduct transaction audit of the transactions of the Corporate Debtor. Based on the findings of the transaction auditor, the Applicant made a determination that the Corporate Debtor had been subjected to fraudulent trading or wrongful trading covered under Section 66 of the said Code, which are to be avoided and reversed and/or set aside. In such circumstances, the Applicant had filed an application under Section 66 of the Code being I.A. (IBC) No. 1926/KB/2024 which is pending adjudication before this Tribunal.

The applicant had conducted CoC meetings from time to time to discuss each and every possibility to revive the corporate debtor and further to update the progress in the CIRP of the Corporate Debtor to the CoC members. The applicant has conducted 5 meetings of the CoC in total, details whereof are in the following manner: -

The applicant submitted the first progress report by way of an application bearing I.A. (IBC) No. 1421 of 2024 to update on the ongoing CIRP process. The Applicant published Form G inviting Expression of Interest (for short "EoI") from Prospective Resolution Applicants (for short "PRA on 30.06.2024 in the newspapers, namely "Financial Express" in English and "Aajkal" in Bengali, both Kolkata edition. The Applicant received emails from few interested applicants requesting him to provide various information regarding EoI. Eligibility Criteria for prospective resolution applicants, brief teaser and information about the Corporate Debtor and the last date for submission of Resolution Plan. Accordingly, the Applicant replied to all the queries put forward by the interested parties. But unfortunately, no EoI was received by the undersigned.

Since no EoI was received, the CoC discussed over the matter in its Third meeting and resolved to re issue Form G. Pursuant to the decision taken by the CoC, the Applicant re-issued Form G in the newspapers being "Financial Express" in English and "Aajkal" in Bengali, both Kolkata edition on 30^th July, 2024. No EoI was received.

The two registered valuers, Mr. Sarbajit Dutta and Mr. Balkrishna Lal More were appointed to determine and ascertain the Fair Value and Liquidation Value of Securities and Financial Assets of the Corporate Debtor. The valuers have sent their respective valuation reports to the Applicant. As per the said two valuation reports, the liquidation value of the corporate debtor, which is reproduced as under: -

The Applicant convened Fourth meeting of the CoC on 23^rd August, 2024 in order to decide further course of action of CIRP. In the said meeting, the sole Financial Creditor being the petitioning creditor with 100% voting share was present. During the CoC meeting, the Applicant/RP sought guidance from the CoC on whether to issue a third invitation for Expressions of Interest (EOIs). Mr. Jitendra Kumar Mishra, a CoC member representing the Financial Creditor, indicated that after discussing the matter with senior management, it was advised to file an application for liquidation directly rather than issuing another Form G. This recommendation was based on the absence of any resolution applicants or EOIs despite two previous issuances of Form G. Since EOI was not received even after issuance of Form G on two occasions, the CoC being the only member present and voting, passed the resolution with 100% voting share to initiate Liquidation Process of the Corporate Debtor. The CoC with 100% voting share to file appropriate application before this Tribunal for initiation of Liquidation Process.

The Applicant issued email dated 4^th October, 2024 to the members of the CoC for deliberations on best estimate of liquidation costs and other issues. The COC had replied to the email of the applicant vide its email dated 6th October, 2024, therein indicating the necessary clarifications to the queries raised by the applicant also indicating the professional fees of the liquidator.

We have considered the submission made by the Ld. Counsel and perused the record.

Section 33(2) of the Code enjoins the Adjudicating Authority to pass an order for liquidation of the Corporate Debtor when the CoC with 66% approves the Liquidation of Corporate Debtor.

Hence, we do find merit in the prayers made in IA(IBC)(LIQ.)/35(KB)2024, and deem it fit to Order liquidation of the Corporate Debtor.