2019 (9) TMI 1656 - 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 - HELD THAT - After hearing submissions of the learned counsel for the Petitioner/ Financial Creditor and having perused the records, this Adjudicating Authority is satisfied with the proof placed by the Petitioner that default has occurred in respect of financial debt which the Corporate Debtor was liable to pay to the Petitioner. The Petitioner has also placed on record proof of sending notices and paper publication. The Petitioner has complied with all the requirements as stipulated under the provisions of the IB Code, 2016 for the purpose of initiating Corporate Insolvency Resolution Process. In these circumstances, this Adjudicating Authority is inclined to admit the instant petition. The instant petition is admitted and this Adjudicating Authority order the commencement of the Corporate Insolvency Resolution Process which shall be completed in accordance with the time lines prescribed in section 12 of the 1B Code, 2016, reckoning from the day this order is passed - Application allowed.

Summary

Issues Involved:
Company petition under section 7 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor.

Detailed Analysis:

1. Background Facts and Loan Facilities:
The petitioner, a Public Sector Bank, filed a Company Petition against the Corporate Debtor, a company engaged in manufacturing iron and steel, for defaulting on loan facilities availed under consortium banking arrangements. The Corporate Debtor approached the Banks for term loans and working capital facilities, which were duly authorized and executed by the Corporate Debtor and its guarantors.

2. Default and NPA Classification:
The Corporate Debtor failed to repay the dues as per the agreed terms, leading the Financial Creditor to classify the account as a Non-Performing Asset (NPA) as per RBI norms. The Financial Creditor initiated recovery proceedings, which were allowed by the Debt Recovery Tribunal.

3. Ex-Parte Proceedings and Adjudication:
Despite multiple hearing dates and notices, the Corporate Debtor failed to appear, leading to ex-parte proceedings. The Adjudicating Authority examined the proof of default, notices, and compliance with IB Code provisions, concluding that the default had occurred, and admitted the petition.

4. Commencement of Insolvency Resolution Process:
The Adjudicating Authority ordered the commencement of the Corporate Insolvency Resolution Process, appointing an Insolvency Resolution Professional (IRP) proposed by the Financial Creditor. The moratorium was declared, prohibiting suits, asset transfers, and enforcing security interests against the Corporate Debtor.

5. Role of IRP and Compliance:
The IRP was directed to take charge of the Corporate Debtor's management, issue public announcements, and call for claim submissions. Directors, promoters, and associated persons were instructed to cooperate with the IRP. The Financial Creditor and Registry were directed to send a copy of the order to the IRP for compliance.

6. Communication and Admittance of Petition:
The Registry was instructed to communicate the order to the Financial Creditor and the Corporate Debtor. The detailed address of the IRP was provided for communication purposes. The Company Petition was admitted by the Adjudicating Authority.

This detailed analysis covers the key aspects of the judgment, including the background, default, adjudication process, commencement of insolvency resolution, role of the IRP, compliance requirements, and communication directives.