NCLT Rejects Resolution Plan for Girdhari International Pvt. Ltd., Orders Liquidation

Resolution Plan Found Non-Compliant with Statutory Requirements; Tribunal Cites Lack of Feasibility and Viability

In a significant development, the National Company Law Tribunal (NCLT) Ahmedabad Bench has rejected the resolution plan for Girdhari International Pvt. Ltd., citing non-compliance with statutory requirements and a lack of feasibility and viability. The tribunal has ordered the liquidation of the company under Section 33(1)(b) of the Insolvency and Bankruptcy Code, 2016.

The decision was delivered by a bench comprising Sh. Shammi Khan, Member (Judicial), and Sh. Sanjeev Sharma, Member (Technical). The tribunal found that the resolution plan, submitted by the consortium of Mr. Kailash Thanmal Shah and M/s. Nova Dyestuff Industries Pvt. Ltd., failed to address the cause of default, demonstrate feasibility and viability, and provide for effective implementation.

The tribunal expressed concerns over the commercial wisdom exercised by the Committee of Creditors (CoC), which had approved the resolution plan without proper evaluation of its feasibility, viability, and implementation strategy. The NCLT highlighted that the CoC's decision appeared arbitrary and lacked transparency, undermining the integrity of the insolvency resolution process.

According to the tribunal, Girdhari International Pvt. Ltd. had no business operations, employees, or tangible assets, making liquidation the only feasible course to maximize creditor value. The tribunal also noted the absence of a viable revival strategy in the resolution plan, further justifying the decision to initiate liquidation.

The NCLT's order mandates the appointment of Mr. Rajendra Jain as the liquidator for the company. The tribunal has directed the liquidator to take charge of the corporate debtor's assets, books, and records, and to perform all duties as prescribed under the Insolvency and Bankruptcy Code, 2016.

The tribunal's decision underscores the importance of ensuring that resolution plans comply with statutory requirements and demonstrate a clear path for the revival of distressed companies. The case also highlights the critical role of the CoC in evaluating resolution plans, emphasizing the need for thorough scrutiny and adherence to the principles of feasibility and viability.

Bottom Line:

Resolution Plan under Insolvency and Bankruptcy Code, 2016 - Rejection of resolution plan for non-compliance with statutory requirements under Sections 30 and 31 and Regulation 38(3) of CIRP Regulations. Corporate Debtor admitted into liquidation under Section 33(1)(b).

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 30, 31, 33; Regulation 38(3) of CIRP Regulations

Mrs. Neha Bhasin, (NCIT)(Ahmedabad Bench) : Law Finder Doc Id # 2815904