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2018 (6) TMI 1763 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - shares of the Financial Creditor in M/s. Sun Networks Private Limited came to be pledged to India Bulls for the loans availed by the Corporate Debtor - existence of debt and dispute or not - HELD THAT - It is an admitted fact that the shares of the Financial Creditor in M/s. Sun Networks Private Limited came to be pledged to India Bulls for the loans availed by the Corporate Debtor. As per the agreement between the Financial Creditor and the Corporate Debtor and the Corporate Guarantor, the amount realized by India Bulls and on the sale of shares came to be treated as loan by the Financial Creditor in the books of account of the Corporate Debtor - It is also an admitted fact that the Corporate Debtor failed to repay the loan amount as per the agreements entered into between the Financial Creditor and the Corporate Debtor. The Corporate Debtor in turn admitted that it has no financial wherewithal to pay off the liabilities. The Corporate Debtor has also accepted that Arbitral Award is in existence and also accepted its inability to pay its debts. The Petition as the Applicant has made out a case and the petition is admitted and it is also satisfied that the Adjudicating Authority in admitting the Petitions. It is also proved that there is a debt due payable by the Corporate Debtor/Respondent 1 and both the Corporate Debtor (R-1) and Corporate Guarantor/Respondent 2 have defaulted in making the payments. Petition admitted - moratorium declared.
Issues Involved:
1. Admissibility of the Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Financial Creditor’s claim and the Corporate Debtor’s inability to repay. 3. Validity and acknowledgment of the Arbitral Award. 4. Appointment of Interim Resolution Professional (IRP). 5. Declaration of moratorium under Section 14 of the IBC, 2016. 6. Directions for the Corporate Insolvency Resolution Process (CIRP). Detailed Analysis: 1. Admissibility of the Company Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016: The petition was filed by the Financial Creditor against the Corporate Debtor and the Corporate Guarantor under Section 7 of the IBC, 2016. The Tribunal considered the petition and found that the Financial Creditor had made a prima facie case for the initiation of CIRP. The Tribunal noted that the Corporate Debtor's liabilities exceeded its assets, and it was unable to pay its debts. 2. Financial Creditor’s claim and the Corporate Debtor’s inability to repay: The Financial Creditor had pledged shares of M/s. Sun TV Networks Limited as collateral for a loan taken by the Corporate Debtor from M/s. India Bulls Financial Services Limited. The Corporate Debtor failed to repay the loan, leading to the sale of the pledged shares. The amount realized from the sale was treated as a loan from the Financial Creditor to the Corporate Debtor. Despite agreements and an Arbitral Award, the Corporate Debtor admitted its inability to repay the loan amount along with the agreed interest. 3. Validity and acknowledgment of the Arbitral Award: The Arbitral Award passed by the Sole Arbitrator was affirmed by the Hon’ble Madras High Court. The award directed the Corporate Debtor to register the Memorandum of Deposit and complete the mortgage of immovable properties in favor of the Financial Creditor. Despite these directions, the outstanding amount was not paid to the Financial Creditor, leading to the filing of the present applications under Section 7 of the IBC, 2016. 4. Appointment of Interim Resolution Professional (IRP): The Tribunal appointed Mr. Nurani Subramanian Suryanarayanan as the IRP proposed by the Applicant. The Tribunal confirmed that there were no disciplinary proceedings pending against the IRP and directed him to take charge of the management of the Corporate Debtor and the Corporate Guarantor immediately. 5. Declaration of moratorium under Section 14 of the IBC, 2016: The Tribunal declared a moratorium effective from the date of the order until the completion of the CIRP. The moratorium prohibits the institution or continuation of suits or proceedings against the Corporate Debtor and Corporate Guarantor, transferring or disposing of their assets, and any action to foreclose or recover security interests. 6. Directions for the Corporate Insolvency Resolution Process (CIRP): The Tribunal ordered the commencement of the CIRP, to be completed within 180 days from the date of the order. The IRP was directed to make a public announcement and call for submissions of claims. The Tribunal also directed the Directors and Promoters of the Corporate Debtor and Corporate Guarantor to extend all cooperation to the IRP. The IRP was instructed to maintain accounts of the proceeds from the realization of assets to ensure no sale beyond the claims made by the Petitioner and other creditors. Conclusion: The Tribunal admitted the petitions and ordered the commencement of the CIRP against both the Corporate Debtor and the Corporate Guarantor. The IRP was appointed, and a moratorium was declared to facilitate the resolution process. The applications were disposed of with the above directions, ensuring the protection of the Financial Creditor’s interests and compliance with the IBC, 2016.
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