2017 (5) TMI 1634 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - outstanding debt - financial debt - Held that - There is no disciplinary proceedings pending against the Interim Resolution Professional, proposed by the Financial Creditor. This Petition was listed before this Adjudicating Authority on 12.5.2017. This Adjudicating Authority directed the Financial Creditor to issue Notice of hearing. Financial Creditor, in compliance with the directions of this Adjudicating Authority, issued Notice of date of hearing and filed proof of despatch. On 17.5.2017, i.e., on the date of hearing, none remained present on behalf of the Corporate Debtor. The debt due to the Financial Creditor is a Financial Debt . The Petition is complete in all respects. The Financial Debt is defined in sub-section (8) of Section 5 of the Code. In view of the above discussions, this Petition is admitted under Section 7 (5) of the Code.

Summary

Issues:
Petition under Section 7 of The Insolvency and Bankruptcy Code, 2016 seeking reliefs under Section 7(5)(a) and Section 13(1)(b) - Default in repayment by the Corporate Debtor - Appointment of Interim Resolution Professional - Declaration of moratorium under Section 13 - Prohibition of certain actions against the Corporate Debtor.

Analysis:
The Petitioner, a Financial Creditor, filed a Petition under Section 7 of The Insolvency and Bankruptcy Code, 2016 seeking reliefs under Section 7(5)(a) and Section 13(1)(b). The Petition was based on the default by the Corporate Debtor, a Public Limited Company, in repaying the outstanding amount of Rs. 36,66,03,057.44 along with interest and other charges. The Petitioner had issued multiple notices demanding payment, which were not complied with by the Corporate Debtor. The Petitioner provided evidence of default through various documents such as Deed of Hypothecation, Corporate Guarantee Agreement, and Certificate of Registration of Mortgage Charges.

The Adjudicating Authority found that there was no disciplinary proceeding pending against the proposed Interim Resolution Professional. The Petition was listed for hearing, and despite due notice, no one appeared on behalf of the Corporate Debtor. The Adjudicating Authority determined that the debt due to the Financial Creditor qualified as a 'Financial Debt' as defined in the Code. Consequently, the Petition was admitted under Section 7(5) of the Code.

Following the admission of the Petition, the Adjudicating Authority appointed an Interim Resolution Professional as per Section 13(1)(b) of the Code. Additionally, in accordance with Section 13 of the Code, the Authority declared a moratorium, prohibiting certain actions against the Corporate Debtor. These actions included instituting suits, transferring assets, enforcing security interests, and recovering property. Exceptions to the moratorium were outlined, including transactions notified by the Central Government and the supply of essential goods or services to the Corporate Debtor.

The order of moratorium was to be in force from the date of the order until the completion of the Corporate Insolvency Resolution Process, subject to the provisions under Section 14(4) of the Code. The Adjudicating Authority directed the Petitioner Financial Creditor and the Interim Insolvency Resolution Professional to be informed of the order, along with the Respondent Corporate Debtor.