NCLT Hyderabad Grants A Series Of Concessions/Waivers To The Successful Bidder

Background Facts

State Bank of India (“Financial Creditor”) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the K.R.R Infraprojects Pvt. Ltd. (“Corporate Debtor”). On 06.08.2021 the Adjudicating Authority initiated CIRP against the Corporate Debtor. Sri Krishna Mohan Gollamudi was appointed as an Interim Resolution Professional (IRP) and later confirmed as the Resolution Professional.

On 22.03.2022 the Adjudicating Authority ordered liquidation of the Corporate Debtor and the Resolution Professional was confirmed as the Liquidator. Since the Corporate Debtor had no fixed assets except some receivables, the Liquidator published e-auction sale notices for selling the Corporate Debtor as a going concern, on ‘as is where is’, ‘as is what is’, ‘whatever there is’ and ‘no recourse’ basis.

On 12.06.2022, the Corporate Debtor was sold as a going concern and accordingly, a 'Letter of Intent' was issued to the successful bidder.The Liquidator filed an application before the Adjudicating Authority seeking reliefs/waivers/concessions on behalf of the successful bidder.

NCLT Verdict

The Bench opined that since the Corporate Debtor was sold as a going concern, the waivers and concessions sought can be granted for the smooth transition of the Corporate Debtor and continuation of the business by the Liquidator. The Bench granted the following concessions/waivers to the Successful Bidder:

• The Registrar of Companies (ROC) shall waive off all penalties for non-compliances by the erstwhile management and allow the new management to file the old records such as Balance Sheets, Annual Reports, other returns etc. without any penalty.
• All approvals, licenses and benefits in the name of the Corporate Debtor shall continue with the new management subject to payment of renewal fees without any penalties.
• Request was made for clearance from the secured financial creditors and filing of satisfaction of charge by them. The Bench directed that financial creditors are to be paid from the liquidation proceeds and the successful bidder is not to be saddled with liabilities prior to the Effective Date.
• Request was made that the management shall be eligible for any loses as per Income Tax Act to offset against the further profits. The Bench permitted that the successful bidder may approach the authority concerned, which shall consider such request under the relevant law, keeping in view the object of IBC.
• The Registrar of Companies shall waive the penal charges, if any, for any non- compliance by the erstwhile Board, Resolution Professional and Liquidator. It shall include, but not be limited to, the waiver of penalties under all applicable provisions of Companies Act, 2013, which provides for late fee charges, penalty, penal interest, etc.
• The non-compliance of provisions of any of the laws, rules, regulations, directions, notifications, circulars, guidelines, policies, licenses, approvals, consents or permissions, prior to the date of acquisition, stands extinguished qua the bidder.
• The new management shall not be liable for any payment arising out of the contingent liabilities on account of bank guarantees.
• Requested benefits to be available on retrospective basis, without levy of fees/penalties, in case of non-maintenance of requisite record or non-filing of the returns by the Corporate Debtor, which has resulted in lapsing or ineligibility of the said benefits under the new GST regime. The Bench permitted the successful bidder to approach the authority concerned, which shall consider such request under the relevant law, keeping in view the object of IBC.

Case Title: State Bank of India v K.R.R Infraprojects Pvt. Ltd.,

Case No.: CP (IB) No.430/7/HDB/2020

Counsel For Applicant: Mr. Amir Bavani, Advocate

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