Mumbai: NCLT Orders Liquidation Of Rao Edusolutions After Resolution Process Fails

Mumbai: The National Company Law Tribunal (NCLT) has directed the liquidation of Rao Edusolutions Private Limited after the Committee of Creditors (CoC) failed to approve any resolution plan within the prescribed insolvency resolution period. Acting on the recommendation of the CoC, the tribunal has appointed Bharati Daga as the official liquidator.

The nine-page order states that the liquidator shall submit a preliminary report to the adjudicating authority within 75 days from the liquidation commencement date in accordance with Regulation 13 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

The tribunal further stated that the appointed liquidator shall exercise all the powers of the Board of Directors and the Key Managerial Personnel, while the powers of the existing Board, Key Managerial Personnel, and partners of the corporate debtor shall cease to have effect. The tribunal also directed the personnel of the education company to extend full cooperation to the liquidator in managing the liquidation process.

The insolvency proceedings against Rao Edusolutions commenced after an operational creditor’s petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) was admitted on July 3, 2023. Following the commencement of the Corporate Insolvency Resolution Process (CIRP), public announcements were issued inviting claims, and the Committee of Creditors was constituted.

During the resolution process, the Resolution Professional invited expressions of interest from prospective resolution applicants, receiving interest from three entities as well as the promoters of the corporate debtor. However, despite multiple extensions for the submission of resolution plans, no viable plan materialised. The only plan eventually received, submitted by a suspended director of the company, was not accompanied by the required earnest money deposit, and the cheque later issued towards the deposit was dishonoured.

Following these developments, the CoC, at its meeting held on April 30, 2024, resolved to liquidate the company with an overwhelming majority exceeding the statutory threshold prescribed under the IBC. While the application initially stated that the liquidation resolution had secured a 98.56 per cent voting share, the tribunal clarified that the correct figure was 98.1262 per cent, noting that the discrepancy did not affect the validity of the decision.

The company had also made headlines in 2023 after the Central Goods and Services Tax (CGST), Mumbai, initiated proceedings against it over an alleged tax evasion of Rs 14 crore. According to the CGST, the company had allegedly collected Goods and Services Tax (GST) at 18 per cent on tuition fees from students while declaring unrelated exempt services in the returns filed with the department. The CGST had subsequently arrested two of the company’s directors in connection with the alleged misappropriation of funds.