2019 (1) TMI 1768 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - This Adjudicating Authority, on perusal of the documents filed by the creditor, is of the view that the corporate debtor defaulted in repaying the loans availed and also placed the name of the insolvency resolution professional to act as interim resolution professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore the application under sub-section (2) of section 7 is taken as complete, accordingly this Bench hereby admits this petition. Petition admitted.

Issues:
1. Corporate insolvency resolution process sought by the petitioner against the corporate debtor for default in repayment.
2. Validity of the facilities granted to the corporate debtor by the petitioner.
3. Submission of security documents by the petitioner.
4. Default in repayment by the corporate debtor as per the statement of account.
5. Notice issued under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
6. Response of the corporate debtor regarding the settlement and restructuring of the loan account.
7. Rejection of the one-time settlement proposal by the petitioner.
8. Admission of the petition by the Adjudicating Authority and appointment of an interim resolution professional.

Analysis:
1. The petitioner, a bank, sought the corporate insolvency resolution process against the corporate debtor due to default in repayment of facilities granted. The petitioner provided evidence of the default, including a sanction letter and security documents, leading to the initiation of the insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.

2. The facilities granted to the corporate debtor by the petitioner were detailed in the sanction letter, including cash credit, term loan, and bank guarantee amounting to a total of Rs. 14,69,00,000. The petitioner submitted security documents such as a certificate of registration of mortgage, letter of general lien, demand promissory note, and acknowledgment of debt to support their claim.

3. The petitioner presented security documents like a certificate of registration of mortgage, letter of general lien, and other agreements to establish the validity of the facilities granted and the default in repayment by the corporate debtor. These documents played a crucial role in demonstrating the legal basis for seeking the insolvency resolution process.

4. The statement of account provided by the petitioner indicated that the amount claimed in the petition aligned with the repayment default by the corporate debtor. This statement further strengthened the petitioner's case for initiating the insolvency resolution process against the corporate debtor.

5. A notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was issued to the corporate debtor, demanding repayment of the outstanding amount. This notice highlighted the continued default by the corporate debtor, reinforcing the necessity for the insolvency resolution process.

6. The corporate debtor responded by expressing willingness to settle with the petitioner and restructure the loan account under a new scheme by the Reserve Bank of India. However, the corporate debtor did not dispute the liability or default, indicating a recognition of the financial obligations.

7. Despite the corporate debtor's attempt at a one-time settlement proposal, it was rejected by the petitioner, leading to the continuation of the insolvency resolution process initiated by the petitioner. This rejection further escalated the legal proceedings in the matter.

8. The Adjudicating Authority admitted the petition, appointed an interim resolution professional, and imposed restrictions on legal actions against the corporate debtor during the moratorium period. The comprehensive order outlined the steps to be taken during the insolvency resolution process, ensuring the protection of the interests of all parties involved.

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