NCLT Mumbai-1 (2018.11.29) in Alchemist Asset Reconstruction Company Ltd. Vs. Abhijeet MADC Nagpur Energy Pvt. Ltd. [MA 1343/2018 IN CP (IB)-1315/MB/2017] held that;
It is to be clarified that when sale is to be made on a going concern basis, then certainly after the transfer of undertaking, acquirer gets all right, title and interest in the whole and every part of the undertaking, without any security interest, encumbrance, claim, counterclaim, or any demur, into the acquirer.
Excerpts of the order;
MA 1343/2018 has been filed by the Liquidator seeking certain clarification regarding sale of Corporate Debtor on a going concern basis as per Regulation 32 of the Liquidation Regulations. Liquidator has sought clarification regarding relief in Clause 5.18 (a) to (g). In para 5.18(a) clarification has been sought that the Corporate Debtor shall be transferred to the successful acquirer, who acquires the Undertaking, in accordance with the process for sale of assets laid down in Regulation 32 and Schedule I of the Liquidation Regulations. The transfer of the Undertaking in terms of the above shall vest all rights, title and interest, in the whole and every part of the Undertaking, without any security interest, encumbrance, claim, counter claim, or any demur, into the acquirer.
It is to be clarified that when sale is to be made on a going concern basis, then certainly after the transfer of undertaking, acquirer gets all right, title and interest in the whole and every part of the undertaking, without any security interest, encumbrance, claim, counterclaim, or any demur, into the acquirer. But the only condition is that sale is made on a going concern basis and the sale proceeds shall be distributed in accordance with the provisions as given in Section 53 of the IBC, 2016. In order of the parity given in the code, regulation 32 of IBBI (Liquidation Process), 2016 as amended üpto, 22.10.2018 provides for sale of assets which is as follows;
"The Liquidator may -
(a) Sell an assets on a standalone basis;
(b) Sell
(i)the assets in a slump sale;
(ii) a set of assets collectively; or
(iii) the assets in parcels; or
(c) Sell the Corporate Debtor as a going concern; or
(d)The business(s) of the Corporate Debtor as a going concern.
Provided that where an asset is subject to security interest, it shall not be sold under any of the clauses (a) to (f) unless the security interest therein has been relinquished to the liquidation estate.”
On perusal of the above provision, it is clear that during the liquidation, the Corporate Debtor sale can be made on going concern basis, provided creditor has relinquished the security interest.
Liquidator is directed to strictly follow the Regulation, before making the offer for selling the unit as a going concern basis, it should be ensured that none of the creditors opted for selling the secured assets.
Since as per the amended Regulation, sale of the Corporate Debtor can be made on a going concern basis, no further clarification is required.
MA 1343/2018 is accordingly disposed of.
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