2019 (12) TMI 1415 - 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 Corporate Debtor has not denied having availed credit facilities, creation of mortgage, and classification of the loan account as Non Performing Asset and the non-payment of the loan amount. The Corporate Debtor and its Guarantors are jointly and severally liable to pay the outstanding amount against the loans availed by the Corporate Debtor - Since the Financial Creditor has proved existence of debt and default and there being no denial from the Corporate Debtor with respect to the outstanding amount of ' 2,83,10,52,539.32 as on 14.01.2019, this application is admitted. Application admitted - moratorium declared.

Summary

Issues:
Insolvency and Bankruptcy Application under section 7 of the Insolvency & Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process due to default in repayment by the Corporate Debtor.

Analysis:
1. The Financial Creditor filed an Insolvency and Bankruptcy Application against the Corporate Debtor for defaulting on a substantial loan amount. The Corporate Debtor had availed significant credit facilities from a consortium of banks, and despite various attempts to recover the dues, the Corporate Debtor failed to repay the outstanding amount.

2. The Financial Creditor provided detailed evidence of the debt and default, including the dates of loan agreements, security documents, and non-performing asset classification. The Corporate Debtor, in response, cited adverse conditions like drought affecting its operations and proposed a One Time Settlement to resolve the issue. However, the Corporate Debtor did not dispute the debt or default.

3. Upon reviewing the documents and submissions, the Tribunal found that the Financial Creditor had established the existence of debt and default by the Corporate Debtor. As the Corporate Debtor did not contest the outstanding amount, the Tribunal admitted the Application and appointed an Interim Resolution Professional to oversee the Corporate Insolvency Resolution Process.

4. The Tribunal declared a moratorium to prevent any legal actions against the Corporate Debtor, appointed the Interim Resolution Professional, and outlined specific directions to be followed during the insolvency resolution process. The moratorium would remain in effect until the completion of the Corporate Insolvency Resolution Process or a decision on liquidation, as per the provisions of the Insolvency & Bankruptcy Code.

5. The Tribunal's decision to admit the Application and initiate the Corporate Insolvency Resolution Process was based on the clear evidence provided by the Financial Creditor, the absence of denial from the Corporate Debtor regarding the debt, and the necessity to address the default and resolve the financial issues through the prescribed legal framework.