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2018 (5) TMI 2050 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make payment of its dues - Section 10 of Insolvency Code to be read with Rule-7 of Insolvency and Bankruptcy Rules, 2016 - HELD THAT - It is amply demonstrated that the Applicant is indebted of Financial Creditors as well as Operational Creditors. All such evidences have also established that there was occurrence of default' in payment of outstanding Debt. The Debt amount is substantially large and prima facie the Debtor appears to be unable to pay-off the Debt due to precarious financial condition. As a consequence, the present Petition U/s.10 of the I B Code as filed by the Corporate Debtor itself deserves to be admitted. Application admitted - moratorium declared.
Issues involved:
Initiation of insolvency proceedings by a corporate debtor against itself under Section 10 of the Insolvency and Bankruptcy Code, 2016. Detailed Analysis: 1. Submission of Form No.6 under Section 10: The Petitioner submitted Form No.6 to initiate insolvency proceedings against itself as a Corporate Debtor. The application detailed the debt owed to Financial Creditors and Operational Creditors, totaling a significant amount. The Petitioner accepted the outstanding debt and sought declaration as insolvent under the Insolvency Code. 2. Nature of Debt and Default: The Petitioner provided a detailed compilation of debt nature, including loan agreements, bank guarantees, and outstanding amounts to creditors. The Petitioner admitted defaults in repayment, leading to the initiation of insolvency proceedings under Section 10. 3. Legal Precedents and Case References: Reference was made to a previous case involving the Petitioner, where insolvency proceedings were dismissed. However, it was argued that the Petitioner was entitled to file the current petition under Section 10 of the Insolvency Code. 4. Business Operations and Financial Status: The Petitioner's business activities, including manufacturing and distribution, were outlined. The financial statements showed a substantial net loss, indicating financial distress and inability to pay creditors. 5. Appointment of Interim Resolution Professional (IRP): The Petitioner proposed the name of an IRP, Mr. Krishna Chamadia, who consented and had no pending disciplinary proceedings. The appointment of the IRP was confirmed for further proceedings. 6. Admission of Petition and Commencement of Moratorium: The Tribunal admitted the petition, triggering a moratorium under Section 14 of the Code. This moratorium included restrictions on legal actions against the corporate debtor, asset disposal, and ensured continuity of essential services during the insolvency resolution process. 7. Commencement of Corporate Insolvency Resolution Process (CIRP): The CIRP was initiated from the date of the order, with the appointed IRP tasked with carrying out duties as per the Insolvency and Bankruptcy Code. The IRP was required to report progress and compliance with the Tribunal's directions within 30 days. 8. Conclusion: The judgment concluded by confirming the admission of the petition, appointing the IRP, and commencing the CIRP. The detailed analysis of the debt, default, legal precedents, and business operations supported the decision to initiate insolvency proceedings under Section 10 of the Insolvency and Bankruptcy Code.
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