2019 (8) TMI 1495 - Tri - Insolvency and Bankruptcy

Maintainability of application - Initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The statement of Bank Account as well as Form 2 and written communication proves that there are no disciplinary proceedings pending against the proposed Resolution Professional - the Applicant has succeeded in proving its case and all the requirements to be meted out under Section 7 has been complied with and therefore this is a fit case for ordering admission. The application filed by the Financial Creditor under Section 7 of the Insolvency Bankruptcy Code, 2016, for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, M/s. Venkatesh Logistics Private Limited is hereby admitted - Application admitted - moratorium declared.

Summary

Issues:
1. Application filed under section 7 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor.
2. Default in repayment of debt by the Corporate Debtor leading to the application.
3. Compliance with legal requirements for admitting the application.

Analysis:

1. The Financial Creditor filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, against the Corporate Debtor for failing to repay a debt amounting to ?18,45,63,437.69, leading to a total outstanding amount of ?22,64,52,791.83. The Corporate Debtor had credit facilities but failed to repay, resulting in the account being declared as a Non-Performing Asset (NPA). The Financial Creditor provided evidence such as bank statements, default records, and settlement proposals to support the claim.

2. Despite previous legal proceedings initiated by the Financial Creditor, the Corporate Debtor continued to default on payments, prompting the current application for Corporate Insolvency Resolution Process. The Corporate Debtor was given multiple opportunities to respond and provide a reply affidavit but failed to do so, indicating non-compliance with legal procedures.

3. The Financial Creditor successfully proved the default by presenting documents like recall notices, demand letters, and a CRILC Report. The proposed Insolvency Professional consented to the appointment, and no disciplinary proceedings were pending against them. The Tribunal found the application complete, meeting all requirements under Section 7, leading to the admission of the case.

4. Upon admission, the Tribunal declared a moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016, prohibiting certain actions against the Corporate Debtor. An Interim Resolution Professional was appointed to manage the process, convene the Committee of Creditors, and identify a Resolution Applicant within the specified timeline. The Registry was directed to communicate the order to all relevant parties, and the matter was listed for a progress report on a future date.

5. The comprehensive analysis of the case highlighted the Financial Creditor's legal grounds for initiating insolvency proceedings, the Corporate Debtor's default, and the Tribunal's decision to admit the application based on the evidence presented and legal compliance observed throughout the process.