2017 (2) TMI 1495 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - sick company of not - Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 - HELD THAT - The Insolvency and Bankruptcy Code, 2016 was enacted by Parliament in 67th year of Republic of India. The objective of the Insolvency and Bankruptcy Code is to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all stakeholders, including alteration in priority of payment of government dues and to establish an Insolvency and Bankruptcy Fund, and matters connected therewith or incidental thereto. An effective legal framework for timely resolution of insolvency and bankruptcy would support development of credit markets and encourage entrepreneurship. The present Petition/Application, (as referred under Section 10(2) and 10(3) of the IBC.2016), which has been filed by the Petitioner, has been complied with all the requirements and thus it is a fit case to admit the Petition/application - application admitted - moratorium declared.

Summary

Issues involved:
Initiation of Corporate Insolvency Resolution Process under Section 10 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. The Company Petition was filed seeking to initiate Corporate Insolvency Resolution Process. The company was incorporated in 2005 and engaged in manufacturing activities. It filed a Reference in BIFR under the Sick Industrial Companies Act, which was registered as a sick company due to substantial erosion of net worth.

2. The BIFR Chairman found the company's net worth eroded due to accumulated losses, leading to the dissolution of BIFR. The petitioner approached the Tribunal under Section 10 of the IBC, stating default in payments to secured and unsecured creditors, seeking initiation of insolvency proceedings.

3. The Tribunal acknowledged the BIFR's finding of default and eroded net worth, justifying the need for adjudication under Section 10 of the IBC. The Board Resolution appointed an Interim Resolution Professional, who was found eligible for the role.

4. The Tribunal discussed the objectives of the IBC, emphasizing timely resolution of insolvency to support credit markets, entrepreneurship, and economic growth. The Petition/Application met all requirements under the IBC, leading to its admission by the Tribunal.

5. The Tribunal passed orders admitting the Company Petition, declaring a moratorium on certain actions, directing public announcement of the insolvency process, appointing the Interim Resolution Professional, and instructing cooperation from the company's personnel for information collection.

6. The Interim Resolution Professional was tasked with constituting a committee of creditors, following all applicable provisions of the IBC and IBBI regulations. The first creditors' meeting was to be held within 7 days of committee constitution, with subsequent communication to the Tribunal.

7. The case was scheduled for further proceedings on a specified date, ensuring compliance with the IBC and IBBI regulations for the effective resolution of the company's insolvency.