The Ahmedabad chapter of the National Company Law Tribunal (NCLT) last week passed an order clearing the liquidation of an insolvent company, PSL Ltd, retaining its operational status and its sale as a going concern.
PSL, which has four main plants, had filed an application for a resolution process under the Insolvency and Bankruptcy Code. However, the company that was under the Board for Industrial and Financial Reconstruction for the past seven years did not get a suitable resolution proposal, and the NCLT ordered its liquidation.
In an auction Later, Lucky Holdings made a bid to acquire it as a going concern and emerged the successful bidder.
Meanwhile, the Directorate of Enforcement had directed the liquidator not to proceed with the sale. However, the Delhi High Court permitted the sale in March this year.
“This approval by the NCLT will go a long way in addressing some of the practical issues faced in implementing the sale of the corporate debtor as a going concern under liquidation process,” said Nitin Jain, the liquidator for the company who works as a partner at AAA Insolvency Professional.
“With the company surviving and acquired by the incoming investor, it will lead to preservation of value v/s the liquidation in the piecemeal sale process,” he said.
Last month, the appellate bankruptcy court had passed a similar order in the matter related to Mohan Gems & Jewels.
NCLT’s order last Wednesday said select sections of the IBC provided for the sale of corporate debtors or their business as a going concern abiding to the broad objective of statute — revival and continuation of the company as a going concern.
“We have seen that the prospective buyers are now more confident about the process of sale of corporate debtor as a going concern during the liquidation process,” said Anil Goel, founder of AAA Insolvency Professionals.
