What Happens in NCLT Liquidation: The Su-Kam Case
IBC, What Happens in NCLT Liquidation: The Su-Kam Case — THE IBC FILES: AN ENTREPRENEUR’S PERSPECTIVE
Article 7 of 10 | NCLT liquidation and the day a running company was shut
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THE IBC FILES: AN ENTREPRENEUR’S PERSPECTIVE
Part 4 | By Kunwer Sachdev — The day liquidation switched off a living enterprise
A company serving millions of customers across India, generating ₹600 crore in annual revenue, can be switched off in a single day.
On April 3, 2019, three decades of building India’s power backup industry came to a sudden halt. It was not market competition, technological obsolescence, or customer dissatisfaction that brought down Su-Kam. It was a single legal order passed under the Insolvency and Bankruptcy Code (IBC).
Within 24 hours, manufacturing lines across multiple plants fell silent, bank accounts were frozen, and thousands of lives were thrown into complete turmoil. This is the unvarnished reality of corporate liquidation under the IBC—the day the valuations stopped mattering and human history was reduced to line items on an auction list.
The Day Operations Stopped
When a company enters liquidation, the immediate effect is not a gradual wind-down—it is a sudden, catastrophic freeze. On April 3, 2019, operational control was completely severed from the management team that built the business.
Factory doors were locked, security was taken over, and daily operations ceased overnight. Warranties held by millions of households were invalidated instantly, and an active distribution network spanning over 90 countries collapsed.
The Human Toll: Workers, Suppliers, and Personal Sacrifice
Behind every corporate liquidation order is a human tragedy that legal frameworks fail to measure:
- 5,000 Direct & Indirect Families: Overnight, thousands of factory workers, engineers, sales staff, and office personnel lost their livelihoods. Many had spent decades building Su-Kam from a small workshop into a household brand.
- Vendors & Micro-Suppliers: Hundreds of small component manufacturers and local suppliers who relied on Su-Kam were left holding unpaid invoices, causing cascading financial distress across the supply chain.
- Personal & Family Crisis: The legal proceedings coincided with the birth of my twin children. Holding newborn infants in a hospital room while receiving notices from investigative authorities, losing personal assets, and facing public trials was an unimaginable personal burden.
The Institutional Vacuum: Asset Looting and Systemic Decay
When the Committee of Creditors (CoC) and appointed Resolution Professionals take over a manufacturing company, an operational vacuum is created. Insolvency professionals trained in law and finance are often ill-equipped to manage complex industrial operations, leading to rapid decay:
- Unattended Facilities: Industrial plants in Gurgaon, Himachal Pradesh, and Rajasthan lay idle without operational oversight, leading to machinery rust and structural deterioration.
- Loss of Intellectual Property: Su-Kam’s portfolio of 77 patents—representing 14 years of R&D—was neglected. Maintenance fees went unpaid, causing patents to lapse or be abandoned entirely (see National Wastage: How 77 Su-Kam Patents Went to Zero).
- Asset Depredation & Looting: Without active security and founder oversight, inventory and equipment were stripped or mismanaged across regional warehouses.
- Regulatory Penalties Without Compensation: While regulators later penalized both the RP and liquidator for procedural oversights, neither the enterprise nor its stakeholders were compensated for the lost value. See also: IBBI penalised both the RP and the liquidator.
The Mathematical Absurdity: The Valuation Collapse
The Mathematical Collapse of Su-Kam Under IBC
Peak revenue exceeded ₹600 crore. Brand + 77 patents were valued at ₹0 in the liquidation estate. Founder offer barred under Section 29A.
Section 29A of the IBC barred first-generation founders from bidding for their own companies, effectively preventing a ₹250 crore recovery plan and leaving financial institutions with a fraction of that amount after accounting for CIRP and liquidation expenses.
