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2017 (9) TMI 857 - Tri - Insolvency and BankruptcyInitiation of Insolvency Resolution Process - eligible financial debt - Held that - A perusal of the legal notice got issued by the Applicant and the statutory notice issued by Applicant clearly goes to show that Applicant recalled the entire loan amount both from the Principal Borrower and the Guarantor and both of them failed to repay the loan amount. The liability of the Respondent being a Guarantor is co- extensive with the liability of the Principal Borrower. The debt due to the Applicant Financial Creditor from the Respondent is a financial debt. There is material on record to show that there is occurrence of default in repayment of the financial debt by the Respondent herein, being the Guarantor. The Application filed by M/s. Reliance Commercial Finance Limited is complete in all respects and no defect is pointed out. In this Application filed by M/s. Reliance Commercial Finance Ltd., Respondent did not choose to file any objections. Learned Counsel appearing for the Respondent stated that they are making every effort to settle with all the creditors by making payments in due course of time. In view of the above discussion, the Application filed by the Applicant, M/s. Reliance Commercial Finance Ltd., i.e., CP (IB) No. 66 of 2017 deserves to be admitted, and it is accordingly admitted under Section 7(5) of the Code. Considering the fact that the financial debt due to the Financial Creditor, M/s. Reliance Commercial Finance Limited is higher than the debts together due to other Applicant Financial Creditors, this Adjudicating Authority is of the considered view that the Interim Resolution Professional proposed by M/s. Reliance Commercial Finance Limited should be appointed as Interim Resolution Professional . Therefore, this Adjudicating Authority appoints Shri Pramod Bajranglal Kedia, C/o. Kedia & Kedia Associates, Chartered Accountants, 205, Kaling, Near Mount Carmel School, Behind Bata Show Room, Ashram Road, Ahmedabad- 380009, having Registration No. IBBI/IPA-001/IP-P00091/2017- 2018/10191, as Interim Resolution Professional , because his Written Communication is available. This Adjudicating Authority hereby declares moratorium under section 13(1)(a) of the Code prohibiting as laid down in section 14 of the Code. The Interim Resolution Professional appointed shall also make public announcement about initiation of Corporate Insolvency Resolution Process , as required by Section 13(l)(b) of the Code.
Issues Involved:
1. Initiation of Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Existence of financial debt and default by the Corporate Debtor. 3. Liability of the Corporate Guarantor. 4. Appointment of Interim Resolution Professional. 5. Declaration of moratorium under Section 13(1)(a) of the Insolvency and Bankruptcy Code, 2016. Detailed Analysis: 1. Initiation of Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016: All four applications were filed by different companies as Financial Creditors to initiate the Insolvency Resolution Process against M/s. Anil Limited under Section 7 of the IB Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The applications were consolidated and disposed of by a common order. 2. Existence of Financial Debt and Default by the Corporate Debtor: - CP (IB) No. 66 of 2017: M/s. Reliance Commercial Finance Limited claimed that M/s. Anil Nutrients Limited borrowed ?10,00,00,000 from M/s. Reliance Capital Limited, with M/s. Anil Limited acting as the Corporate Guarantor. The debt was transferred to the applicant following a demerger. Despite repeated requests and reminders, the loan amount was not repaid, leading to a default of ?8,87,94,014 as of 12.10.2016. - CP (IB) No. 69 of 2017: M/s. Kunal Finance and Credit Private Limited claimed a default of ?42,00,000. The Corporate Debtor had previously issued cheques for settlement, which were dishonored. - CP (IB) No. 70 of 2017: M/s. Oarsman Credit Private Ltd. claimed a default of ?45,04,986. The Corporate Debtor had borrowed ?40,00,000, which was not repaid. - CP (IB) No. 71 of 2017: M/s. Socrato Capital Private Ltd. claimed a default of ?39,41,863. The Corporate Debtor borrowed ?35,00,000 and failed to repay. 3. Liability of the Corporate Guarantor: The tribunal noted that the liability of the Corporate Guarantor (M/s. Anil Limited) is co-extensive with that of the Principal Borrower (M/s. Anil Nutrients Limited). The debt owed by M/s. Anil Nutrients Limited to the applicant is considered a 'financial debt' under Clause (i) of sub-section (8) of Section 5 of the IB Code. The tribunal confirmed the occurrence of default in repayment of the financial debt by the Corporate Guarantor. 4. Appointment of Interim Resolution Professional: The applications proposed different individuals as Interim Resolution Professionals. Given that the financial debt due to M/s. Reliance Commercial Finance Limited was higher than the combined debts due to other applicants, the tribunal appointed Shri Pramod Bajranglal Kedia as the Interim Resolution Professional, as proposed by M/s. Reliance Commercial Finance Limited. 5. Declaration of Moratorium under Section 13(1)(a) of the Insolvency and Bankruptcy Code, 2016: The tribunal declared a moratorium prohibiting: - Institution or continuation of suits or proceedings against the Corporate Debtor. - Transferring, encumbering, alienating, or disposing of any assets of the Corporate Debtor. - Actions to foreclose or enforce any security interest created by the Corporate Debtor. - Recovery of any property by an owner or lessor where such property is occupied by the Corporate Debtor. The moratorium will be in effect from the date of the order until the completion of the Corporate Insolvency Resolution Process. The Interim Resolution Professional was directed to make a public announcement about the initiation of the Corporate Insolvency Resolution Process. Conclusion: All four applications were admitted under Section 7(5) of the IB Code, and the tribunal appointed Shri Pramod Bajranglal Kedia as the Interim Resolution Professional. The moratorium was declared, and the order was communicated to all relevant parties. The tribunal ensured that the supply of essential goods and services to the Corporate Debtor would not be interrupted during the moratorium period.
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