2022 (11) TMI 1437 - Tri - Insolvency and Bankruptcy

Corporate Insolvency - application filed u/s 10 of IBC, 2016 r/w rule 7 of AAA Rules by directors authorized vide board resolution for initiation of Corporate Insolvency process in respect of Corporate Debtor being the Corporate Applicant itself - Appointment of Resolution Professional proposed in the Application u/s. 7 or 10 of the Code - HELD THAT - This Bench is of the view that the Corporate Applicant has defaulted in making payment of its debt to the creditors. Hence, this application is admitted. Sub-section (3) (b) of Section 10 mandates the Corporate Applicant to furnish the name of an Interim Resolution Professional. Mr. Raman Devarajan has agreed to accept the appointment as the interim resolution professional and has signed a communication in Form 2 in terms of Rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 dated 27.04.2022. Accordingly, it is seen that the requirement of Section 10(3)(b) of the Code has been satisfied. As a consequence of the application being admitted, moratorium as envisaged under the provisions of Section 14(1), shall follow in relation to the corporate debtor, prohibiting as per proviso (a) to (d) of the Code. However, during the pendency of the moratorium period, terms of Section 14(2) to 14(4) of the Code shall come in force. We direct the Corporate Applicant to deposit a sum of Rs. 2 lacs (Rs. Two Lacs) with the Interim Resolution Professional, namely Mr. Raman Devarajan to meet out the expenses and perform the functions assigned to him in accordance with regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The needful shall be done within one week from the date of receipt of this order by the applicant. The amount however, be subject to adjustment by the Committee of Creditors, as accounted for by Interim Resolution Professional, and shall be paid back to the Applicant. A copy of the order shall be communicated to the Applicant by the Registry. The said order shall be communicated to the IRP above named. Applicant is also directed to provide a copy of the complete paper book with copy of this order to the IRP. In addition, a copy of said order shall also be forwarded to IBBI for its records and to RoC for updating the Master Data.

Summary

Issues:
- Application filed under Section 10 of Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency process.
- Default in repayment of loans by the Corporate Applicant to its creditors.
- Appointment of an Interim Resolution Professional.
- Admittance of the application by the Tribunal.
- Direction to deposit a sum with the Interim Resolution Professional.

Analysis:

1. The application was filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 by the directors authorized by a board resolution for the initiation of the Corporate Insolvency process regarding the Corporate Debtor, which is the Corporate Applicant itself.

2. The Corporate Applicant had availed unsecured short-term loans from different entities, and due to financial difficulties, it was unable to repay the outstanding amounts to its creditors, leading to the filing of the insolvency application.

3. The application included necessary details such as the incorporation of the company, authorized share capital, loan amounts, disbursement dates, and repayment terms for each loan facility, demonstrating the financial obligations of the Corporate Applicant.

4. The Corporate Applicant provided supporting documents, including audited financial statements for specific years and a provisional financial statement, to substantiate its financial position and compliance with the requirements under the Code.

5. The Tribunal found that the Corporate Applicant had defaulted in making payments to its creditors based on the documents on record and submissions made, leading to the admission of the insolvency application.

6. The Corporate Applicant proposed the name of an Interim Resolution Professional as required by Section 10(3)(b) of the Code, and the proposed professional satisfied the eligibility criteria, including submitting the necessary declarations and authorizations.

7. Upon admission of the application, the Tribunal directed the Corporate Applicant to deposit a specified sum with the Interim Resolution Professional to cover expenses and fulfill assigned functions, in line with the regulations governing the insolvency resolution process for corporate entities.

8. The Tribunal ensured compliance and communication of the order by directing the Registry to inform the Applicant and the named Interim Resolution Professional, provide necessary documents, and forward the order to relevant authorities for record-keeping and updating.

This detailed analysis covers the key issues addressed in the judgment, highlighting the legal proceedings and decisions made by the Tribunal regarding the insolvency application and appointment of an Interim Resolution Professional.