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2019 (9) TMI 1613 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - The Corporate Debtor have filed reply and raised an objection with regard to the authorization for the purpose of filing Application and further objected that the Applicant is not a Financial Creditor to the Corporate Debtor and the Corporate Debtor is liable to offer only the mortgaged assets, in the event if it is held liable to pay. The Corporate Debtor has also stated in its Reply that the Financial Creditor has expressly denied the existence of any security and they are attempting to play a fraud on the Courts and this Tribunal. Based on this, it has been submitted that the Financial Creditor is not entitled to any of the reliefs. The Corporate Debtor have filed reply and raised an objection with regard to the authorization for the purpose of filing Application and further objected that the Applicant is not a Financial Creditor to the Corporate Debtor and the Corporate Debtor is liable to offer only the mortgaged assets, in the event if it is held liable to pay. The Corporate Debtor has also stated in its Reply that the Financial Creditor has expressly denied the existence of any security and they are attempting to play a fraud on the Courts and this Tribunal. Based on this, it has been submitted that the Financial Creditor is not entitled to any of the reliefs. The Financial Creditor has fulfilled all the requirements of law including the name of the Resolution Professional for appointment as the IRP - Application admitted - moratorium declared.
Issues:
Adjudication of an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process against a Corporate Debtor. Analysis: The Financial Creditor filed an application seeking admission to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, declare moratorium, and appoint an Interim Resolution Professional (IRP). The Financial Creditor claimed an outstanding amount against the Corporate Debtor based on Debt Recovery Certificates issued by the DRT. The Financial Creditor submitted that the Corporate Debtor mortgaged its property as security for credit facilities availed by other borrowers, leading to default and legal proceedings for recovery. The Financial Creditor, after assignment of rights from another entity, pursued recovery through legal channels, obtaining Recovery Certificates from the DRT. The Corporate Debtor objected to the application, disputing the authorization, the Financial Creditor's status, and the existence of security. The Tribunal found the Corporate Debtor's defenses unsubstantiated and raised as an afterthought, rejecting them as hollow and aimed at derailing the adjudication process. The Tribunal held that the Financial Creditor had met all legal requirements, including proposing a Resolution Professional for appointment as the IRP. Consequently, the application was admitted, and the Corporate Insolvency Resolution Process was initiated, with a direction to complete it within 180 days. An IRP was appointed, and a moratorium was declared from the date of the order till the completion of the resolution process. The moratorium prohibited various actions against the Corporate Debtor, ensuring protection during the resolution period. The IRP was tasked with specific compliance duties under the Insolvency and Bankruptcy Code, and the Directors of the Corporate Debtor were directed to cooperate with the IRP. The Financial Creditor, the Registry, and the IRP were instructed to comply with the order promptly, with detailed contact information provided for the IRP. The Registry was directed to communicate the order to all relevant parties without delay. The judgment emphasized the adherence to legal procedures, the protection of interests during insolvency resolution, and the cooperation required from all stakeholders to facilitate a smooth resolution process. The detailed analysis outlined the sequence of events leading to the insolvency application, the legal basis for admitting the application, the appointment of an IRP, and the imposition of a moratorium to safeguard the Corporate Debtor's assets during the resolution period. The judgment underscored the importance of compliance with the Insolvency and Bankruptcy Code provisions, timely communication of orders, and the collaborative effort needed for effective resolution of insolvency cases.
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