2017 (2) TMI 1407 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Declaration of moratorium and public announcement - Held that - In response to the demand notice dated 25th January, 2017 given by the applicant, the operational creditor vide their letter dated February 6, 2017 has written to the applicant that the company is badly suffering from financial crisis and due to various reasons, it has resulted in erosion of the company s net worth and has been referred to BIFR and the reference pending before the BIFR has been abated and revival of the corporate debtor under the relevant provision of SICA Act has been jeopardised and everything is at standstill. However, in consultation with the company s legal advisors, the company is seeking their guidance to revive the company under the guidance of the Adjudicating Authority under the IBC, 2016. Finally, they sought some breathing time and assured the operational creditor that the payment of all dues will be made. In the circumstances mentioned above, we admit the petition for initiating the Corporate Resolution Process and declare a moratorium and public announcement as stated in section 13 of IBC 2016

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016.

Analysis:
1. The Company Petition was filed by an Operational Creditor to initiate the Corporate Insolvency Resolution Process against a company. The applicant claimed an amount of ?10,20,437 to be in default by the company. The application was submitted in the prescribed form 5 under the Insolvency and Bankruptcy Code, 2016. The operational debtor acknowledged the debt in writing.

2. The applicant issued a demand notice to the operational debtor for the unpaid debt. The operational debtor responded by stating their financial crisis situation and expressed intentions to revive the company under the guidance of the Adjudicating Authority under the IBC, 2016. They requested time for payment of dues.

3. Considering the circumstances, the tribunal admitted the petition for initiating the Corporate Resolution Process, declared a moratorium, and made a public announcement as per section 13 of the IBC, 2016. The relevant sections 13 and 14 were reproduced for clarity regarding the declaration of moratorium and its implications.

4. The tribunal accepted the application and appointed Mr. Anil Agarwal as the Interim Resolution Professional. Mr. Agarwal submitted his consent as required under the NCLT Rules and was deemed qualified to act in this capacity as per the Code and associated regulations.

5. The necessary public announcement under section 15 of the IBC, 2016 was directed to be made by the Operational Creditor. The appointed Interim Resolution Professional was tasked with initiating the resolution process in accordance with the rules.

This detailed analysis of the judgment highlights the key legal proceedings and decisions taken by the tribunal regarding the initiation of the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016.