NCLT has ordered liquidation of a corporate debtor after 91.75% of the Committee of Creditors (CoC) approved the move, declining to appoint the Resolution Professional (RP) as liquidator under amended IBC provisions.
The National Company Law Tribunal (NCLT) has directed the liquidation of a corporate debtor after the Committee of Creditors (CoC) approved the proposal with 91.75% voting share, ruling that the Resolution Professional (RP) cannot be automatically appointed as the liquidator under the amended Insolvency and Bankruptcy Code (IBC).
This decision aligns with the 2023 amendment to Section 35 of the IBC, which mandates an independent process for appointing a liquidator, preventing conflict of interest. The tribunal observed that the RP, having managed the Corporate Insolvency Resolution Process (CIRP), must undergo eligibility screening and empanelment verification by the Insolvency and Bankruptcy Board of India (IBBI) before being considered for the role of liquidator.
Implication: The ruling reinforces procedural integrity in insolvency proceedings, emphasizing that appointment as RP does not confer preferential status for liquidator roles. Practitioners must ensure compliance with the independent appointment mechanism under the amended IBC framework.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 35 (as amended)
