2018 (12) TMI 1570 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - proof f default - Held that - Default has occurred and the present application under Section 10 is complete and that the applicant is not ineligible under Section 11 of the Code. Further all requirements prescribed under sub-section 3 (a) and (b) of Section 10 of the Code have also been complied with. The Insolvency and Bankruptcy Code, 2016 is a complete Code in itself. The provisions of the Code are to be mandatorily followed. Adherence to the statutory requirements has to be in toto. Section 10 (4) (a) of the Code mandates the Adjudicating Authority to admit the application if it is complete. When the language of the Code is clear and explicit, the Adjudicating Authority must give effect to it, whatever be the consequences. In view of the above, we are satisfied that the present application is complete and that the applicant corporate debtor has committed a default. Therefore, as the application is complete the present petition is Admitted.

Summary

Issues involved:
- Application under Section 10 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process initiation.
- Default committed by the applicant company leading to financial distress.
- Compliance with statutory requirements under the Code for filing the application.
- Appointment of Interim Resolution Professional.
- Issuance of moratorium under Section 14 of the Code.

Analysis:
1. The application was filed under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process for the applicant company itself. The company faced financial distress due to operational damage, making it difficult to repay loans, leading to default. The applicant company sought to restructure through the corporate insolvency resolution process to overcome the distress situation.

2. The applicant company provided details of its incorporation and operations, including setting up a solar generation plant in Gujarat. The plant faced severe damage due to heavy rainfall, resulting in a shutdown and subsequent insurance claim settlement. Financial assistance was availed from Export-Import Bank of India, but repayment became challenging post the operational damage.

3. The applicant company attempted to restructure its loans by proposing a plan to representatives of the Export-Import Bank and PFC but could not reach an agreement due to low operational capacity and revenue generation. Subsequently, the loan account was declared as a Non-Performing Asset (NPA), and the loan liability was crystallized in Indian rupees.

4. The application fulfilled the requirements of Section 10 of the Code, including submission of audited financial statements, appointment of an Interim Resolution Professional, and compliance with all necessary forms and documents. The applicant company also confirmed its eligibility to file the application under Section 11 of the Code.

5. The Tribunal acknowledged the completeness of the application, the occurrence of default by the corporate debtor, and the adherence to statutory requirements. Consequently, the Tribunal admitted the petition, issued a moratorium under Section 14 of the Code, and appointed Mr. Gurpreet Singh as the Interim Resolution Professional to oversee the resolution process.

6. The moratorium prohibited various actions against the corporate debtor, including suits, asset transfers, and recovery proceedings, while ensuring the supply of essential goods and services. The order directed the Interim Resolution Professional to take necessary steps as per the Code and submit interim reports, with the moratorium remaining in effect until the completion of the resolution process.

7. The Tribunal scheduled further proceedings for January 4, 2019, and instructed the supply of the order copy to all relevant parties, including the Interim Resolution Professional. The judgment highlighted the mandatory adherence to the provisions of the Insolvency and Bankruptcy Code, emphasizing the importance of following statutory requirements for insolvency resolution processes.