2021 (9) TMI 1443 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantor of the Corporate Debtor - demand notices were sent but the dues were not cleared - HELD THAT - The Petitioners have has complied with Section 95(4) of IBC that the demand notices dated 14.02.2020 have been sent to the Respondents/Personal Guarantors and that the Respondents/Personal Guarantors failed to make the payment it is concluded that there is a default on the part of the Respondents/Personal Guarantors by not fulfilling the debts owed to the Corporate Debtor as per the clauses contained in the Consent Terms in respect of the outstanding financial debt which is apparent from the documents placed on record. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Insolvency Resolution Process against Personal Guarantors under Section 95(1) of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with procedural requirements under the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019.
3. Appointment of Insolvency Resolution Professional.
4. Commencement of interim-moratorium under Section 96(1)(a) of the Insolvency and Bankruptcy Code, 2016.

Issue-wise Detailed Analysis:

1. Initiation of Insolvency Resolution Process against Personal Guarantors:
The petitions filed by M/s. J M Financial Asset Reconstruction Company Limited under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 (I&B Code, 2016) sought to initiate the Insolvency Resolution Process against the personal guarantors of the Corporate Debtor, M/s. Unitek Power Solutions India Limited. The personal guarantors involved were Mrs. Reena Paul, Mrs. Susan Zachariah, Mr. John Zachariah, Mrs. Annu Mathew, Mr. Mathew John, Mr. Korah John, and Mr. K.G. Paul. Each guarantor had executed several agreements of guarantee on various occasions, securing the financial facilities availed by the Corporate Debtor from Federal Bank Limited.

2. Compliance with Procedural Requirements:
The Tribunal noted that the creditor had complied with Section 95(4) of the I&B Code, 2016, which includes sending demand notices dated 14.02.2020 to the personal guarantors. The petitions were accompanied by details and documents relating to the debts owed, the failure to pay within the stipulated period, and relevant evidence of default. The creditor had also provided copies of the application to the debtors as required.

3. Appointment of Insolvency Resolution Professional:
The Tribunal appointed Mr. Francis Mathew as the Insolvency Resolution Professional (IRP) to carry out the functions under the Insolvency and Bankruptcy Code, 2016. The Tribunal directed an advance payment of Rs. 2,00,000 to be made to the IRP immediately to initiate the process, which would be adjusted towards the fee and expenses payable to the IRP. The IRP was tasked with making recommendations for acceptance or rejection of the applications within ten days from the date of receipt of the order.

4. Commencement of Interim-Moratorium:
The interim-moratorium under Section 96(1)(a) of the Insolvency and Bankruptcy Code, 2016 commenced on the date of filing of the applications by the creditor. During this period, any legal action or proceeding in respect of any debt was deemed to have been stayed, and creditors were prohibited from initiating any legal action or proceedings in respect of any debt.

Order:
The Tribunal allowed the petitions under Section 95 of the Insolvency and Bankruptcy Code, 2016, directing the commencement of the interim-moratorium and appointing Mr. Francis Mathew as the Resolution Professional. The Registry was instructed to immediately communicate the order to the creditors, personal guarantors, corporate debtor, and the Resolution Professional by email. The Tribunal scheduled further proceedings for 26.10.2021.

Conclusion:
The Tribunal concluded that there was a default on the part of the personal guarantors by not fulfilling the debts owed to the Corporate Debtor. The orders were issued to initiate the Insolvency Resolution Process, commence the interim-moratorium, and appoint a Resolution Professional to carry out the necessary functions under the Insolvency and Bankruptcy Code, 2016.