2017 (4) TMI 1412 - Tri - Insolvency and Bankruptcy

Initiation of insolvency resolution process - outstanding debt - Held that - The State Bank of Mysore assigned the loans disbursed to the corporate debtor in favour of M/s. Edelweiss Asset Reconstruction Co. Ltd. by an assignment deed dated 30-06-2014. The Edelweiss Asset Reconstruction Company Limited in its capacity as financial creditor filed this petition for initiation of corporate insolvency resolution process. This Petition clearly reveals that there is a debt as defined in Section 3(11) of I&B Code 2016, and also there is default in this case within the meaning of Section 3(12) of I&B Code, 2016. Further, Section 5(7) clearly provides that an assignee of a financial debt is also a financial creditor and hence the petition is well within the ambit of Section 7 of I&B Code,2016. The financial creditor has named one Mr. Vijaykumar V Iyer, Deloitte Touche Tohmatsu India LLP Indiabulls Finance Centre, Tower 3, 27th Floor, Senapati Bapat Marg, Elphinstone Road (West), Mumbai - 400 013 Email [email protected], Registration No. IBBI/IPA-001/IP-00526/2016-17/1370 as the proposed interim resolution professional and the said professional vide his letter dated 29-03-2017 agreed for his appointment and also stated that no disciplinary proceedings pending against him. On looking at the petition and in the circumstance that there is a substantial compliance of provisions of section 7 of the IBC Code 2016, the petition is admitted declaring moratorium

Summary

Issues:
Insolvency and bankruptcy application for initiation of insolvency resolution process by a financial creditor against the corporate debtor.

Analysis:
The case involves an insolvency and bankruptcy application for the initiation of the insolvency resolution process by a financial creditor against the corporate debtor. The corporate debtor had entered into a master restructuring agreement with several lenders for financial assistance for project implementation and operational requirements. The lenders had provided term loans and working capital facilities, with the corporate debtor creating security through hypothecation of moveable assets and mortgage of immovable properties. Due to project strain, the lenders and the corporate debtor agreed to a master restructuring agreement for debt reconstruction. The State Bank of Mysore disbursed significant amounts to the corporate debtor, leading to defaults under the facilities provided. Bank of Baroda, as the lead bank, issued notices for recovery under the SARFAESI Act, indicating substantial defaults by the corporate debtor. Subsequently, the State Bank of Mysore assigned the loans to the financial creditor, who then filed the petition for initiating the corporate insolvency resolution process.

The petition demonstrated the existence of debt and default as defined under the Insolvency and Bankruptcy Code, 2016. The assignee of a financial debt is considered a financial creditor under the Code, thus falling within the ambit of Section 7. The financial creditor nominated an interim resolution professional, who accepted the appointment without any pending disciplinary proceedings. The Tribunal, upon reviewing the petition and finding substantial compliance with Section 7 of the IBC Code 2016, admitted the petition, declaring a moratorium with specific directions. These directions included prohibiting suits or proceedings against the corporate debtor, maintaining the supply of essential goods or services, and appointing the nominated interim resolution professional. The order of moratorium was to be in effect until the completion of the corporate insolvency resolution process or until specific conditions were met.

In conclusion, the Tribunal admitted the petition for initiating the corporate insolvency resolution process, imposing a moratorium with detailed directions to protect the interests of all parties involved. The appointment of the interim resolution professional and the adherence to the provisions of the Insolvency and Bankruptcy Code were crucial aspects considered in the judgment.