The National Company Law Tribunal (NCLT) has directed to liquidate debt-ridden dairy firm Kwality Ltd after the company failed to finalise any bidder within the specified time-frame.
The NCLT had directed to initiate insolvency proceedings against Kwality Ltd on December 11, 2018 over the plea filed by the financial creditors Punjab National Bank and KKR India Financial Services.
A two-member bench of the Delhi-based NCLT observed that despite extension in the insolvency timeline, the lenders of the Kwality failed to finalise any potential buyer for the company.
The Committee of Creditors (CoC) had received only one resolution plan for the company from a consortium of Haldiram Snacks and Pioneer Securities, but the bid could not get approved with the required majority of 66 per cent votes of lenders.
Following this, its resolution professional (RP) Shailendra Ajmera, who is part of consultancy firm E&Y, had moved an application to initiate the liquidation process for the company as mandated under the Insolvency & Bankruptcy Code (IBC).
"In view of the facts and circumstances, this authority (NCLT) is satisfied that the application filed for initiation of liquidation proceedings against the corporate debtor (Kwality) is a fit case for ordering the liquidation of the corporate debtor namely Kwality Ltd in the manner laid down in IBC, 2016," said a two-member NCLT bench comprising M S Tariq and N K Bhola.
The NCLT also appointed Ajmera as liquidator.
"The personnel of the corporate debtor are hereby directed to extend all corporations to the liquidator as may be required in managing the affairs of the corporate debtor," said the NCLT.
As the liquidation order has been passed, no suit or other legal proceedings shall be initiated by or against Kwality without prior approval of the NCLT, it added.
Moreover, the "moratorium passed under Section 14 of the IBC, 2016 shall cease to have its effect from the date of the order and that a fresh moratorium under Section 33(5) of IBC, 2016 shall commence".
"The liquidator shall submit a preliminary report to the NCLT within 75 days from the liquidation commencement," said the NCLT, while directing the liquidator to send the copy of the order to Registrar of Companies, the Insolvency and Bankruptcy Board of India and IT Department including Assessing IT Officer of the IT Circle.