#Liquidation

The NCLAT ruled that Section 32A immunity applies to purchasers acquiring a corporate debtor as a going concern during liquidation, extending clean slate protection to the period between the liquidation order and the sale certificate. This shields buyers from pre-existing liabilities and aligns liquidation sales with resolution plan safeguards.

The NCLAT ruled that the Adjudicating Authority possesses residuary jurisdiction under Section 60(5)(c) of the IBC to issue consequential directions necessary for implementing a going concern sale during liquidation. The tribunal extended the 'clean slate' doctrine - typically applied in resolution plans - to liquidation proceedings, ensuring that a successful auction purchaser receives the corporate debtor's assets free from encumbrances. This decision clarifies the AA's powers to facilitate liquidation sales and protects buyers from legacy claims, impacting liquidators, successful bidders, and secured creditors.

NCLAT quashed the liquidation order of Jeppiaar Cements, revived the corporate insolvency resolution process and permitted withdrawal of the Sec 12A application even though the Committee of Creditors failed to meet the 66 % voting threshold prescribed by Sec 33. The ruling affirms a resolution professional’s discretion to deem a Sec 12A withdrawal viable, protecting creditor interests and keeping restructuring options open for the debtor.

The NCLAT affirmed the NCLT’s liquidation order, holding that the Committee of Creditors’ commercial wisdom cannot be judicially reviewed. Consequently, a rejected resolution plan automatically leads to winding-up, affecting all parties in IBC insolvency cases.

Bombay High Court held auction purchasers under IBC are liable for property tax only from the sale certificate date, not prior periods. This protects purchasers from pre-CIRP municipal dues and ensures municipal corporations cannot demand historical tax from new owners.

NCLAT holds that contempt proceedings cannot be sustained if the underlying court order rests on a mistaken factual basis. The ruling clarifies that compliance must be objectively possible-disbursements made prior to the order render contempt inapplicable, offering critical protection to liquidators and parties acting in good faith.

The Bombay High Court has ruled that funds deposited by a corporate debtor under court-approved consent terms remain available to creditors even after the company’s dissolution, as the deposit constitutes a secured claim protected by judicial oversight. This clarifies that court-monitored deposits are not extinguished by corporate winding-up, reinforcing creditor protections in insolvency proceedings.

NCLAT grants exclusion of 87 days from the CIRP timeline due to delays in transitioning Resolution Professionals, emphasizing that liquidation should be a last resort. The ruling reinforces the need to preserve corporate debtors as going concerns, offering relief to stakeholders facing procedural delays under the IBC.

The Bombay High Court has ruled that an interim liquidation order under Section 103 of the Maharashtra Cooperative Societies Act does not extinguish a cooperative society’s right to vote in federal cooperative elections. This protects the democratic participation of member societies until a final winding-up order is passed, reinforcing that legal status and electoral rights remain intact during provisional proceedings. The decision upholds natural justice and the continuity of cooperative governance structures.

The NCLAT has ruled that unsecured state tax dues, including Haryana VAT, cannot claim priority as secured creditors under Section 53 of the IBC merely by virtue of statutory charge - only creditors with actual security interest qualify. This clarifies the hierarchy in liquidation distributions and impacts all state revenue departments seeking recovery from insolvent corporate estates.

NCLAT rules that a promoter's restructuring proposal cannot be treated as a valid Resolution Plan under the Insolvency and Bankruptcy Code unless it complies with Section 30(2) and the formal Corporate Insolvency Resolution Process. The ruling reinforces that informal settlements bypassing statutory safeguards are inadmissible, impacting creditors' rights and insolvency proceedings.

The NCDRC has ruled that a bank paying premiums for fire insurance on hypothecated assets qualifies as a consumer under the Consumer Protection Act, 1986, entitling it to indemnity even when the borrower is under liquidation. This clarifies that banks are not mere financial intermediaries in insurance transactions and can assert direct rights against insurers, reshaping recovery strategies in distressed loan portfolios.

Madhya Pradesh High Court reaffirms that revenue mutation entries cannot establish ownership, clarifying rights of secured creditors and liquidators in corporate insolvency.