2017 (4) TMI 1312 - Tri - Companies Law

Corporate insolvency process - existence of debt - Held that - From the material placed on record, this Adjudicating Authority is satisfied that a default has been committed by the Corporate Debtor in repayment of the loan amount. The Application is complete. There is a declaration by the proposed Insolvency Resolution Professional that no disciplinary proceedings are pending against him. This Adjudicating Authority is admitting the Petition under Section 7(5)(a) of the Code. This Adjudicating Authority is also appointing the Chartered Accountant, Mr. Ritu Rastogi, residing at D-2/71 , 2nd Floor, Janak Puri, Delhi-110058 having Regn. No. IPA- 01 / 2016-17/1P-00151 as Interim Resolution Professional under Section 13(I)(b) of the Code. Section 13 of the Code says that after admission of the application under Section 7, the Adjudicating Authority shall pass an order declaring a moratorium for the purposes referred to in Section 14

Summary

Issues:
1. Default in repayment of loan by Corporate Debtor
2. Admissibility of the Petition under Section 7 of The Insolvency and Bankruptcy Code, 2016
3. Appointment of Interim Resolution Professional
4. Declaration of moratorium under Section 13 of the Code

Analysis:

1. Default in repayment of loan by Corporate Debtor:
The Applicant, a Financial Creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor for defaulting on a loan agreement. The Corporate Debtor had entered into various agreements with the Applicant, promising to repay a loan amount of ?7,00,00,000 within 60 months. However, the Corporate Debtor began defaulting on monthly instalments from November 2016, eventually ceasing all payments. The Financial Creditor terminated the agreements and demanded repayment, leading to the initiation of insolvency proceedings.

2. Admissibility of the Petition under Section 7 of The Insolvency and Bankruptcy Code, 2016:
The Adjudicating Authority reviewed the evidence presented by the Financial Creditor, including the loan agreements, personal guarantees, and proof of default by the Corporate Debtor. After confirming the occurrence of a default, completeness of the application, and absence of disciplinary proceedings against the proposed Resolution Professional, the Authority admitted the petition under Section 7(5)(a) of the Code. The Authority appointed an Interim Resolution Professional to oversee the insolvency resolution process.

3. Appointment of Interim Resolution Professional:
In compliance with Section 13(I)(b) of the Code, the Adjudicating Authority appointed a Chartered Accountant as the Interim Resolution Professional to manage the insolvency resolution process. The appointed professional was tasked with handling the affairs of the Corporate Debtor during the moratorium period, ensuring the orderly resolution of the debt and assets involved in the case.

4. Declaration of moratorium under Section 13 of the Code:
Upon admitting the petition and appointing the Interim Resolution Professional, the Adjudicating Authority declared a moratorium under Section 13(1)(a) of the Code. The moratorium prohibited various actions against the Corporate Debtor, including the institution of suits, transfer of assets, enforcement of security interests, and recovery of property. Exceptions were made for essential goods or services supply to the Corporate Debtor. The Authority ordered a public announcement of the initiation of the Corporate Insolvency Resolution Process and specified the duration of the moratorium until the completion of the resolution process.

In conclusion, the judgment addressed the default in loan repayment, admissibility of the petition, appointment of an Interim Resolution Professional, and the declaration of a moratorium to facilitate the Corporate Insolvency Resolution Process.