2017 (7) TMI 970 - Tri - Insolvency and Bankruptcy

Initiating corporate insolvency resolution process under Sections 10 of the Insolvency and Bankruptcy Code, 2016 - Held that - The figures extracted indicate the losses and fall in revenue considerably. The Applicant Company is facing the notice under SARFAESI Act, 2002, apart from huge amount of default committed in respect of operational creditors. In view of the aforesaid discussion, the instant petition deserves to be admitted. It is, however, observed that the Applicant Company save some sketchy particulars has not given any road map as to how it is going to keep itself afloat as a going concern. However, keeping in perspective the objects for which the Code has been brought into force and to balance the interest of all stakeholders, it is satisfied that the instant application warrants lo be admitted to prevent further erosion of capital and to safeguard the assets of the Applicant Company/Corporate Debtor. Also declare a moratorium as contemplated under Section 14 of the Code

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with procedural requirements for filing the application.
3. Appointment of Interim Resolution Professional (IRP).
4. Declaration of moratorium under Section 14 of the Code.
5. Directions to the Interim Resolution Professional.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The application was filed by SRS Modem Sales Limited, a 'Corporate Debtor', under Section 10 of the Insolvency and Bankruptcy Code, 2016 (the Code), for initiating the Corporate Insolvency Resolution Process (CIRP). The 'Corporate Debtor' falls within the definition of 'Corporate Applicant' as per Section 5(5) of the Code.

2. Compliance with Procedural Requirements:
The application was submitted in Form 6 as prescribed by Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The 'Corporate Debtor' provided details of its incorporation, authorized share capital, and current financial status, including a list of directors and shareholders. The application included resolutions authorizing specific directors to file the petition and appointing an Insolvency Professional.

The 'Corporate Debtor' also submitted details of financial and operational creditors, including amounts in default. The total debt raised from financial creditors was ?79,32,48,652.04, and the total debt from operational creditors was ?61,83,15,442.36, amounting to a total default of ?141,16 crores.

3. Appointment of Interim Resolution Professional (IRP):
The 'Corporate Debtor' proposed Mr. Sameer Rastogi as the Interim Resolution Professional (IRP), who filed a written communication in Form 2, declaring his eligibility and compliance with the Code of Conduct. The Tribunal appointed Mr. Sameer Rastogi as the IRP for a period of thirty days or as determined by the Committee of Creditors, whichever is earlier.

4. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, which included:
- The institution or continuation of suits or proceedings against the 'Corporate Debtor'.
- Transferring, encumbering, or disposing of any assets of the 'Corporate Debtor'.
- Any action to foreclose or enforce any security interest.
- Recovery of any property occupied by the 'Corporate Debtor'.

5. Directions to the Interim Resolution Professional:
The Tribunal directed the IRP to:
- Take control and custody of the assets of the 'Corporate Debtor'.
- Act in accordance with the Code and the rules framed thereunder.
- Constitute the Committee of Creditors within 15 days.
- Ensure cooperation from the 'Corporate Debtor' and its personnel.
- Make a public announcement within 3 days of the order.
- File a weekly report of events to the Tribunal.

Conclusion:
The application for initiating the Corporate Insolvency Resolution Process was admitted, and the Tribunal issued directions to ensure compliance with the Code and safeguard the interests of all stakeholders. The IRP was appointed, and a moratorium was declared to prevent further erosion of the 'Corporate Debtor's' assets.

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