2017 (7) TMI 1063 - Tri - Insolvency and Bankruptcy

Corporate insolvency resolution process - Held that - We are satisfied that the 'Financial Creditor' has proved by overwhelming evidence that default has occurred, which meets the requirement of Section 3(11) (12) read with Section 7(3)(a) and Section 7 (5) of the Code. We further find that the application is complete in all respects as the Insolvency Professional, Mr. Mahender Kumar has also been propose. As a sequel to the above discussion, this petition is admitted and Mr. Mahender Kumar Khandewal, 703, 7th Floor, New Delhi House, Barakhamba Road, Connaught Place, New Delhi-110 001, [email protected], whose name also figures in the latest list of Insolvency Professionals issued by the Insolvency Bankruptcy Board of India is appointed as an Interim Resolution Professional. In pursuance of Section 13 (2) of Code, we direct that public announcement shall be immediately made by the Interim Resolution Professional with regard to admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code. A necessary consequence of the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) (d).

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by the Financial Creditor for triggering the insolvency resolution process in the matter of a Corporate Debtor.
2. Details of financial debts, defaults, and evidence presented by the Financial Creditor.
3. Admittance of the petition, appointment of an Interim Resolution Professional, and declaration of moratorium.

Issue 1: Application under Section 7 of the Insolvency and Bankruptcy Code
The Punjab National Bank, acting as the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the insolvency resolution process concerning Bhushan Power and Steel Limited, the Corporate Debtor. The Financial Creditor provided detailed information about the Corporate Debtor, its authorized and paid-up share capital, and the nature of the debt owed. The application also named an Insolvency Professional, satisfying the requirements of the Code.

Issue 2: Details of financial debts, defaults, and evidence
The Financial Creditor outlined the financial debts owed by the Corporate Debtor, including working capital facilities, term loans, and external commercial borrowings. Specific defaulted amounts were disclosed under various agreements, along with the dates of initial default. The application contained a comprehensive breakdown of the defaulted amounts, supported by documentary evidence and records, including bank statements and guarantees provided by guarantors. The Tribunal found the evidence presented by the Financial Creditor to be overwhelming, meeting the requirements of the Code.

Issue 3: Admittance of the petition, appointment of an Interim Resolution Professional, and declaration of moratorium
Upon hearing the arguments, the Corporate Debtor did not raise any objections. The Tribunal, satisfied with the completeness of the application and fulfillment of Code requirements by the Financial Creditor, admitted the petition. An Insolvency Professional was appointed as an Interim Resolution Professional, and a public announcement was directed to be made regarding the admission of the application under Section 7 of the Code. The Tribunal declared a moratorium, imposing restrictions on legal actions against the Corporate Debtor and asset transfers. The Interim Resolution Professional was tasked with managing the affairs of the Corporate Debtor in accordance with the provisions of the Code, with the obligation to preserve the value of the Corporate Debtor's property.

In conclusion, the Tribunal admitted the petition, appointed an Interim Resolution Professional, and declared a moratorium, setting forth strict guidelines for the management of the Corporate Debtor's affairs during the insolvency resolution process.