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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (9) TMI Tri This

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2020 (9) TMI 997 - Tri - Insolvency and Bankruptcy


Issues:
Setting in motion Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor for default in payment.

Analysis:
The Company Petition was filed by Bank of India to initiate CIRP against Wadhwa Buildcon LLP for defaulting on a payment of ?27,32,30,721.74, invoking Section 7 of the Insolvency & Bankruptcy Code. The Petitioner had initially sanctioned a Term Loan of ?40.00 Crores which was later reduced to ?27.00 Crores at the request of the Corporate Debtor. Various security documents were executed to secure the facilities sanctioned, as detailed in the petition.

The statement of account showed that a sum of ?25,76,50,063.10 was due from the Corporate Debtor, with additional uncharged and penal interest leading to a total default amount of ?27,32,30,722. The Petitioner had issued a notice under section 13(2) of the SARFAESI Act, 2002, classifying the account as a Non-Performing Asset (NPA) and demanding payment.

In response, the Corporate Debtor raised several contentions, including offering settlements, selling properties, and facing difficulties due to market conditions like demonetization and GST. However, the Bench observed that there was a clear default in repayment and the debt qualified as a "Financial Debt" under the Code. The Corporate Debtor's admission of the account becoming NPA further supported the Petitioner's case.

The Bench referred to a Supreme Court ruling highlighting the process for a financial creditor to trigger CIRP, emphasizing the importance of establishing default and the subsequent admission of the application. Satisfied with the petition's compliance with Section 7 of the Code, the Bench admitted the Petition, declaring a moratorium and appointing an Interim Resolution Professional. The order of moratorium was to be effective until the completion of CIRP, approval of a resolution plan, or liquidation of the Corporate Debtor.

The detailed analysis of the petition, responses from both sides, legal provisions, and the Bench's observations culminated in the decision to admit the petition and initiate the CIRP process, ensuring the protection of the interests of the Petitioner and the Corporate Debtor within the framework of the Insolvency & Bankruptcy Code.

 

 

 

 

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