2019 (9) TMI 1288 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - existence of debt and dispute or not - HELD THAT - The Operational Creditor has fulfilled all the requirements of Section 9 - the Operational Creditor has been able to successfully make out its case for initiating CIRP process against the Corporate Debtor, as while admitting and acknowledging the debt owed by it to the Operational Creditor it has shown its helplessness to pay the amount and clear its liability towards the Operational Creditor. Application admitted - moratorium declared.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process.

Analysis:
The application was filed by an Operational Creditor against a Corporate Debtor for non-payment of dues amounting to ?18,91,255. The Operational Creditor, engaged in the business of marketing and supply of Computer Hardware and Software products, had supplied goods to the Corporate Debtor as per orders placed. Despite sending invoices and receiving payment for a period, the Corporate Debtor stopped making payments, leading to a demand notice being issued. The Corporate Debtor admitted its liability in response to the demand notice but failed to make the payment within the stipulated time frame, prompting the Operational Creditor to file the application under Section 9 of the Insolvency and Bankruptcy Code.

The Tribunal reviewed the documents provided by the Operational Creditor and found that all requirements of Section 9 had been fulfilled. The Corporate Debtor acknowledged the debt but expressed inability to clear the outstanding amount. Consequently, the Tribunal admitted the petition and issued several directions/orders. These included declaring a moratorium, appointing an Interim Resolution Professional, and directing the Operational Creditor to deposit a specified amount in an ESCROW Account for meeting preliminary expenses related to the Corporate Insolvency Resolution Process. The Tribunal also instructed the Registry to communicate the order to all relevant parties and scheduled a follow-up date for progress reporting.

The orders issued by the Tribunal encompassed various aspects such as the declaration of moratorium, restrictions on the Corporate Debtor during this period, appointment of the Interim Resolution Professional, and the timeline for convening a meeting of the Committee of Creditors. The Tribunal emphasized the importance of compliance with the directives and specified the procedures for communication and issuance of certified copies of the order to concerned parties. The judgment aimed to initiate the Corporate Insolvency Resolution Process efficiently and ensure the protection of the Operational Creditor's interests while adhering to the provisions of the Insolvency and Bankruptcy Code, 2016.