2019 (3) TMI 1775 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to liquidate its financial debt - existence of debt and dispute or not - HELD THAT - On putting in appearance before this Bench through their advocate Mr. Abhishek Mishra, the Corporate Debtor has admitted its liability, but expressed its inability to pay because of financial constraints - also, The outstanding unpaid debt has been evidenced through their Ledger Accounts duly corroborated by the Bank Statements. Given the facts and circumstances that the Corporate Debtor admits its default and inability to repay the Petitioner's prayer merits consideration - petition admitted - moratorium declared.

Summary

Issues:
1. Petition filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Corporate Debtor's inability to repay financial debt despite demands.
3. Evidence of outstanding unpaid debt through Ledger Accounts and Bank Statements.
4. Corporate Debtor admitting liability but expressing inability to pay due to financial constraints.
5. Imposition of moratorium under Section 14 of the Code and appointment of an Interim Resolution Professional (IRP).

Analysis:
1. The judgment pertains to a petition filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process due to the Respondent's inability to liquidate its financial debt. The Petitioner alleged a longstanding financial relationship with the Corporate Debtor, who failed to repay a significant amount despite demands and commitments. The petition was admitted by the Tribunal based on the Corporate Debtor's admission of default and financial constraints.

2. The Corporate Debtor acknowledged its liability but cited financial difficulties as the reason for non-payment. Despite requests and demands, the Corporate Debtor failed to honor its commitment to repay the debt. The outstanding unpaid debt was supported by Ledger Accounts and Bank Statements, providing evidence of the financial transaction and default.

3. Following the admission of default by the Corporate Debtor, the Tribunal imposed a moratorium under Section 14 of the Code. The moratorium included restrictions on legal actions against the Corporate Debtor, disposal of assets, enforcement of security interests, and recovery of property. Essential goods or services supply to the Corporate Debtor was protected during the moratorium period. The appointment of an Interim Resolution Professional (IRP) was confirmed, and the IRP was tasked with fulfilling statutory requirements and filing a report.

4. The financial creditor proposed the name of Mr. Ajay Gupta as the IRP, providing his registration details and consent. Mr. Ajay Gupta's appointment as the IRP was confirmed by the Tribunal, and the case was scheduled for renotification to receive the IRP's report on the specified date. The judgment highlighted the procedural steps taken in accordance with the relevant sections of the Insolvency & Bankruptcy Code to address the Corporate Debtor's financial default and initiate the resolution process.