NCLT rejected the appointment of a Resolution Professional as liquidator in the same case, enforcing the bar under amended Section 34(4) of the IBC to prevent conflict of interest.
NCLT Rejects Interim Liquidator Appointment Under IBC Sec 34(4)
The National Company Law Tribunal (NCLT) has rejected the appointment of a Resolution Professional (RP) as the interim liquidator for the same corporate debtor, strictly enforcing the amended provisions of Section 34(4) of the Insolvency and Bankruptcy Code (IBC). This bar applies to prevent conflicts of interest when transitioning from CIRP to liquidation.
The RP had applied for appointment under Section 34 of the IBC after the Committee of Creditors (CoC) failed to approve a resolution plan. However, NCLT held that the 2019 amendment to Section 34(4) explicitly prohibits an incumbent RP from acting as liquidator unless a written consent of 90% of financial creditors is obtained — a threshold not met in this case.
This strict interpretation underscores legislative intent to ensure impartiality during the liquidation phase. Practitioners must plan succession for liquidation roles early in the CIRP, especially when resolution is uncertain, and ensure compliance with creditor consent requirements under the IBC regime.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 34(4)
