2018 (12) TMI 1671 - Tri - Insolvency and Bankruptcy

Admissibility of application - Initiation of Corporate Insolvency Resolution Process - Corporate Debtor - inability to liquidate debts - Section 8 of the Insolvency Bankruptcy Code - HELD THAT - On being served through the process of Bench, the Corporate Debtor entered appearance through their counsel, Mr. Simran Jot Singh. Ld. counsel has candidly admitted the claim made by the Operational Creditor and has expressed their inability to liquidate the same. This is corroborated by the Minutes of Meeting of the Board of Directors convened on 6th November, 2018, wherein it was resolved that the default in payment of the amount claimed in the petition be admitted. Copy of the resolution has been placed on record. In view of the categorical admission of the Corporate Debtor expressing its inability to liquidate the amount claimed, the prayer of the Operational merits consideration and is hereby being admitted - the petition is Admitted.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process based on inability to liquidate debts.

Analysis:
The petition was filed by the Operational Creditor seeking to initiate the Corporate Insolvency Resolution Process of the Respondent/Corporate Debtor due to its inability to clear debts. The Operational Creditor, engaged in wholesale supply, had a business relationship with the Corporate Debtor involving payment of dues and interest on delayed payments. Despite issuing two dishonored cheques, the Corporate Debtor failed to reduce the liability, leading to the petition. The claim amount, including interest, stood at ?12,96,214, and the petition was filed following the necessary format and documentation.

Upon being served, the Corporate Debtor, represented by counsel, admitted the claim and expressed an inability to settle it. This admission was supported by a resolution passed during a Board of Directors meeting. Consequently, the Tribunal admitted the petition, initiating a moratorium as per Section 14 of the Insolvency & Bankruptcy Code. The moratorium included restrictions on legal actions against the Corporate Debtor, asset disposal, enforcement of security interests, and property recovery. Essential goods or services supply to the Corporate Debtor was to continue uninterrupted during this period.

The Tribunal appointed an Interim Resolution Professional (IRP) since the Operational Creditor did not name one in the petition. Mr. Akash Shingar was appointed as the IRP, tasked with statutory obligations under the Code and required to file interim reports periodically. Additionally, the Operational Creditor was instructed to deposit ?2,00,000 in the IRP's account for immediate expenses. The petition was disposed of, with a renotification scheduled for the IRP's interim report on January 14, 2019.