2020 (2) TMI 1439 - 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 - Financial Creditors - HELD THAT - As per Memorandum of Association of the Corporate Debtor (Annexure A8) the main objects of the Corporate Debtor are to carry on the business of purchase, sale, import, export, process and manufacture of food products in the form of packaged foods and beverages, ready to cook and ready to eat foods and snacks and other consumer food products - The Corporate Applicant submitted that the total term loan sanctioned was ₹ 64,850 lakhs from KSIDC. The Corporate Debtor made defaults in repayment of ₹ 27.02 Lakhs due from 05.05.2014 to 05.02.2019 of ₹ 540.40 lakhs. The Corporate Debtor also defaulted in payment of interest of ₹ 457.37 lakhs due from 30.09.2014 to 31.03.2019 on account of cash loss incurred during the period - Corporate Debtor also furnished Sanction Letter and Default Letter issued by the KSIDC (Annexure A-2) and the unaudited financial Statements for 2019-2020 along with audited financial statements for 2017-2018 and 2018-2019 as a proof of existence of Operational Creditors and to establish the Financial Condition of the Corporate Debtor. Considering the above submissions this application deserves to be admitted - In view of the fact that the Financial Creditor has no objection in admitting this Application, the application is Admitted. While admitting the application the moratorium is declared - petition allowed.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process against a Corporate Debtor under Section 10 of the Insolvency & Bankruptcy Code 2016.

Analysis:
The application was filed by a Corporate Applicant seeking to initiate Corporate Insolvency Resolution Process against a specific Corporate Debtor. The Corporate Applicant, who is the Managing Director of the Corporate Debtor, was authorized to file the application under the Code by a Special Resolution. The Corporate Debtor's main objective, as per its Memorandum of Association, is related to the business of food products. The Corporate Debtor had defaulted on repayment of a substantial term loan and interest amounts due to a financial institution. The application included relevant documents such as the Sanction Letter, Default Letter, and financial statements to support the claim.

Analysis:
Upon admission of the application, the Tribunal declared a moratorium under Section 14(1) of the Code, prohibiting certain actions against the Corporate Debtor. The moratorium also ensured the continuity of essential goods or services supply to the Corporate Debtor. The moratorium would remain in effect until the completion of the Corporate Insolvency Resolution Process or until specific conditions were met, such as approval of a Resolution Plan or liquidation of the Corporate Debtor.

Analysis:
The Tribunal appointed an Interim Resolution Professional (IRP) to manage the affairs of the Corporate Debtor during the resolution process. The IRP was given specific directions regarding the exercise of powers, preparation of asset inventories, compliance with the Code and relevant regulations, public announcements, constitution of a committee of creditors, and reporting requirements. The Corporate Debtor, its Directors, and personnel were instructed to cooperate with the IRP in managing the affairs and accessing necessary information.

Analysis:
The Tribunal directed the IRP to submit regular progress reports and convene meetings as required by the Code. The counsel for the Applicant was tasked with delivering a copy of the order to the IRP promptly, and the Registry was instructed to send a copy to the IRP's email address without delay. The order was dated the 3rd day of February, 2021, signifying the official commencement of the Corporate Insolvency Resolution Process for the specific Corporate Debtor.