NCLT | With no prospects, substance and bleak chances of recovery, Resolution Professional seeks liquidation — With its acceptance, Nirav Modi’s Firestar dooms

National Company Law Tribunal

National Company Law Tribunal (NCLT): The Coram of H.V. Subba Rao (Judicial Member) and Chandra Bhan Singh (Technical Member) while allowing the application for the liquidation of the Corporate Debtor by the CoC, appointed Mr Santanu T Ray as the Liquidator as provided under Section 34(1) of the Insolvency and Bankruptcy Code, 2016.

In the instant matter the Resolution Professional, Ram Ratan Kanoongo, through an application had sought for liquidation of Firestar International Limited (hereinafter referred as Corporate Debtor) under Section 33(1) read with Section 60 of the Insolvency and Bankruptcy Code, 2016. The CoC had made the following observations for taking the Corporate Debtor into liquidation without going through the Resolution Plan:

  1. There are no business prospects with the Corporate Debtor;
  2. There is no substance in chasing the legal suits and cases for recovery;
  3. There is no point in spending good money to make efforts to recover bad money, having very remote chance of recovery;
  4. The assets with the Corporate Debtor are not sufficient to repay the amounts of creditors;
  5. Any resolution plan is not possible, which could enable the company to pay the entire debts.

The Tribunal while accepting the application was of the opinion,

“The reasons assigned by the applicant in the application with respect to taking the decision of liquidation of the Corporate Debtor by the CoC appears to be genuine and convincing considering the financial conditions and assets of the company”.

Also, this would be second such company to go into liquidation since February, this year.[Corporation Bank v. Firestar International Limited, 2021 SCC OnLine NCLT 362, decided on 10-08-2021]

Agatha Shukla, Editorial Assistant has reported this brief.

For the Resolution Professional: Adv. Pulkit Sharma

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