2017 (6) TMI 1090 - Tri - Insolvency and Bankruptcy

Insolvency and Bankruptcy proceedings - moratorium applicability - Held that - Section 13 of the Code enjoins upon the Adjudicating Authority to exercise its discretion to pass an order to declare a moratorium for the purposes referred to in Section 14, to cause a public announcement of the initiation of corporate insolvency resolution and call for submission of claims as provided under Section 15 of the Code. Sub-section (2) of Section 13 says that public announcement shall be made immediately after the appointment of Interim Insolvency Resolution Professional. Hence, Shri Devendra Padamchand Jain, having IP Registration No. IBBI/IPA-001/IP-00224/2016-17/1551 dated 13th January, 2017 and residing at A-43, Prime Plaza, Opposite DLA School, Bodakdev, Ahmedabad, is appointed as Interim Insolvency Resolution Professional who filed Form-2 and Certificate of Registration issued by the Insolvency and Bankruptcy Board of India. This Adjudicating Authority also directs the Corporate Applicant to make a public announcement in terms of Clause (b) of sub-section (1) of Section 13 of the Code.

Summary

Issues:
1. Petition under Section 10 of The Insolvency and Bankruptcy Code, 2016.
2. Default in payment of debts to Secured Creditor and Operational Creditors.
3. Abatement of proceedings before the BIFR.
4. Appointment of Interim Insolvency Resolution Professional.
5. Declaration of moratorium under Section 13(1)(a) of the Code.

Analysis:

1. The petitioner, a company registered under the Companies Act, 1956, filed a petition under Section 10 of The Insolvency and Bankruptcy Code, 2016, along with Rule 7 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The petition highlighted the financial creditor, Rajkot Nagarik Sahakari Bank Limited, and operational creditors listed in Annexure-6, with total debts specified in Annexure-7, including debts to secured creditors amounting to ?506.52 lakhs against mortgaged properties.

2. The petitioner affirmed no pending matters with the Debt Recovery Tribunal or Urban Court, Rajkot, and mentioned actions taken by the secured creditor under Section 13(2) and 13(4) of the SARFAESI Act, 2002. The petitioner's default in loan repayment to the secured creditor and operational creditors was acknowledged, leading to the initiation of insolvency resolution process under Section 10 of the Code.

3. The abatement of proceedings before the BIFR was discussed, emphasizing the impact of the amendment to The Sick Industrial Companies (Special Provisions) Repeal Act, 2003, and subsequent actions taken by the bank resulting in the initiation of insolvency resolution proceedings before the National Company Law Tribunal.

4. Following the petition, the appointment of an Interim Insolvency Resolution Professional, Shri Devendra Padamchand Jain, was made, with specific instructions for public announcement and adherence to the Code's provisions regarding moratorium declaration under Section 13(1)(a), prohibiting certain actions against the corporate debtor during the insolvency resolution process.

5. The Tribunal, after due consideration of the petitioner's submissions, appointed the Interim Insolvency Resolution Professional and declared a moratorium under Section 13(1)(a) of the Code, outlining the restrictions and exceptions during the moratorium period, ensuring the continuation of essential services to the corporate debtor while safeguarding the interests of creditors and stakeholders until the completion of the Corporate Insolvency Resolution Process, subject to statutory provisions.