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Substantial material required by CoC to approve liquidation

In Edelweiss Asset Reconstruction Co. Ltd. v. M/S K.K. Kadri Paper Mills Pvt. Ltd., the NCLT Ahmedabad held that even though the CoC is empowered under S.33 of the Code to authorize liquidation of the corporate debtor, they need to show relevant material to throw light on the need for liquidation, and in the absence of such supporting material the  CoC's decision for liquidation cannot be accepted by the NCLT.

The fact that the order of liquidation is for revival and not otherwise, the shareholder's alleged bias against the ‘Resolution Professional’. The Adjudicating Authority rightly observed that the ‘Resolution Plan’ should be planned for ‘Insolvency Resolution’ of the ‘Corporate Debtor’ as a going concern and not for the addition of value with intent to sell the ‘Corporate Debtor’. The purpose to take up the company with the intent to sell the ‘Corporate Debtor’ is against the basic object of the ‘I&B Code’.

 

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