2017 (11) TMI 42 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Initiation of corporate insolvency resolution process by financial creditor - Held that - A conjoint perusal of the provisions of Section 7(2) and 7(5) of the Code would reveal that form and manner of the application has to be the one prescribed by the authorities. It is required to be accompanied by the prescribed fee. It is further evident that if the application is incomplete as per the requirement of Section 7(2) of the Code then this Tribunal being the Adjudicating Authority may reject it. However, proviso to Section 7(5) of the Code postulates that before rejecting the application on the ground that it is incomplete in terms of Section 7(2) of the Code the Tribunal is obliged to give notice to the applicant to rectify the defect. The defect in the application needs to be removed within seven days from the date of receipt of notice. No such situation has arisen and we find that application is complete in all respect. For the reasons, aforementioned this petition is admitted. Shri Rajesh Samson who is duly registered with Insolvency and Bankruptcy Board of India (IBBI/IPA-001/IP-P00240/2017-18/10469) has been proposed as an Interim Resolution Professional. He is hereby appointed as an Interim Resolution Professional. He has filed his certificate of registration with Insolvency and Bankruptcy Board of India. He has also filed his written, communication dated 04.08.2017 in connection with the application to initiate Corporate Insolvency Resolution Process. The disclosure has been made in the letter dated 04.08.2017. In pursuance of Section 13(2) of the Code we direct that public announcement shall be made by the Interim Resolution Professional within the statutory period with regard to admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code.

Issues Involved:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Authorization and completeness of the application.
3. Default of financial debt by the Corporate Debtor.
4. Security interests and guarantees provided.
5. Admission of the application and appointment of Interim Resolution Professional.
6. Imposition of moratorium and its consequences.

Detailed Analysis:

1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The 'Financial Creditor' - Bank of Baroda filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) to initiate the Corporate Insolvency Resolution Process (CIRP) against Amrapali Infrastructure Private Limited. The financial creditor is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

2. Authorization and Completeness of the Application:
The application was presented by Ms. Archana Mishra, authorized by a letter dated 03.02.2017. The Corporate Debtor opposed the application, arguing that the demand amounts were arbitrary and questioned the authority of Ms. Mishra. However, the Tribunal found that the power of attorney executed in favor of Ms. Mishra was valid, and the application was complete in all respects, rejecting the objections raised by the Corporate Debtor.

3. Default of Financial Debt by the Corporate Debtor:
The Corporate Debtor defaulted on multiple loan facilities, including term loans, cash credit facilities, and letter of credit facilities. The principal amount in default under the term loan facility as of 30.04.2017 was ?44,59,00,000, with additional overdue interest and penal interest aggregating to ?7,18,50,626. The Corporate Debtor defaulted on the term loan on 31.07.2016, cash credit on 30.06.2016, and letter of credit on 23.05.2016. The total amount of default was ?97,28,87,703.

4. Security Interests and Guarantees Provided:
The financial creditor provided overwhelming evidence of default, including details of security interests such as second pari passu charge over immovable assets, first charge by hypothecation of tangible/intangible movable properties, and first charge on bank accounts. Corporate guarantees were furnished by Ultra Home Construction Private Limited and Amrapali Smart City Private Limited, while personal guarantees were provided by key individuals.

5. Admission of the Application and Appointment of Interim Resolution Professional:
The Tribunal found that the petitioner satisfied the requirements of Section 7 of the Code. It was established that the default had occurred multiple times. The Tribunal admitted the petition and appointed Mr. Rajesh Samson as the Interim Resolution Professional (IRP). He was duly registered with the Insolvency and Bankruptcy Board of India and had no disciplinary proceedings pending against him.

6. Imposition of Moratorium and Its Consequences:
The Tribunal declared a moratorium under Section 14 of the Code, prohibiting:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of any property by an owner or lessor occupied by the Corporate Debtor.

The IRP was directed to make a public announcement regarding the admission of the application and to perform all functions as per the Code. All personnel connected with the Corporate Debtor were legally obligated to assist and cooperate with the IRP.

Conclusion:
The petition was admitted, and the IRP was appointed with specific directives to manage the Corporate Debtor's affairs, ensuring compliance with the Code. The moratorium was imposed to protect the Corporate Debtor's assets and facilitate the CIRP.

← Previous Next →