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2019 (1) TMI 629 - Tri - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process - Section 10 of Insolvency & Bankruptcy Code, 2016 - scope of the term Corporate Debtor - Held that - Under Clause (b) of Section 10(3) the corporate applicant is bound to propose the name of Registered Resolution Professional to be appointed as Interim Resolution Professional. We have perused the written communication in Form No.2 Annexure-A8 (page Nos.63 to 67) furnished by Mr. Arun Chadha a registered Insolvency Professional with IBBI. This Form contains all the particulars provided in the Form. He has furnished his written consent and stated that presently he is serving as Interim Resolution Professional/Resolution Professional/Liquidator in two proceedings under the Code so far. The figures extracted indicate complete loss of net worth of the corporate applicant. It is clear from the above that the corporate applicant has failed to pay its debt and has thus committed default. In fact the financial creditor despite service has chosen not to appear or file reply or contest the admission of the petition. It clearly seems that the corporate applicant has fallen into debt trap and thus competent to set in motion the insolvency resolution process under the Code to ensure maximum value of assets which is in the interest of all the stakeholders. The petition is admitted.
Issues Involved:
1. Jurisdiction and Incorporation Details 2. Financial Status and Debt Details 3. Compliance with Procedural Requirements 4. Pending Litigations 5. Admission of Petition and Declaration of Moratorium Issue-wise Detailed Analysis: 1. Jurisdiction and Incorporation Details: The Corporate Debtor, M/s Brown Multiwall Paper Bags Ltd. (BMPBL), filed a petition in Form 6 under Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency & Bankruptcy Code, 2016. BMPBL, incorporated on 28.08.1992, with its registered office in Faridabad, Haryana, falls under the territorial jurisdiction of the National Company Law Tribunal, Chandigarh. 2. Financial Status and Debt Details: The Corporate Debtor's authorized share capital is ?1,00,00,000/- with an issued, subscribed, and paid-up capital of ?65,00,000/-. It was advanced various financial facilities by Karnataka Bank Limited, which were later assigned to Phoenix ARC Private Limited. The financial status indicates significant debt, including a cash credit default amounting to ?7,67,76,184.91. The Corporate Debtor also owes operational creditors ?1,11,69,471.66/-, including statutory dues of ?2,43,648.66/-. The financial statements reveal a complete loss of net worth, with no revenue from operations and accumulated losses. 3. Compliance with Procedural Requirements: The petition was filed by Mr. R Ragunath, Director, authorized by a Board resolution dated 11.06.2018. The application met the requirements of Section 10(3) of the Code by providing necessary documents, including financial statements, details of financial and operational debts, and the written consent of the proposed Interim Resolution Professional (IRP), Mr. Arun Chadha. The petitioner also complied with the order dated 27.08.2018 to rectify defects by filing an affidavit with provisional financial statements and invoices of operational creditors. 4. Pending Litigations: Several litigations are pending against the Corporate Debtor: - Karnataka Bank Limited filed an O.A No.84/2007 before the Debt Recovery Tribunal-II, New Delhi, resulting in a consent decree and a Recovery Certificate issued against the Corporate Debtor. - Eviction proceedings under the Haryana Urban (Control of Rent & Eviction) Act, 1973, resulting in an eviction order. - Assessment Orders and Demand Notices issued by the Income-Tax Department. - Provident Fund dues directed by the Employees Provident Fund Organization. - Notice under Section 248(1) from the Registrar of Companies, Delhi. 5. Admission of Petition and Declaration of Moratorium: The Tribunal admitted the petition, declaring a moratorium under Section 14(1) of the Code, prohibiting: - Institution or continuation of suits/proceedings against the Corporate Debtor. - Transfer, encumbrance, or disposal of assets by the Corporate Debtor. - Foreclosure or enforcement of security interest. - Recovery of property occupied by the Corporate Debtor. The moratorium will remain effective until the completion of the CIRP or approval of a resolution plan or an order for liquidation. The matter is listed for the formal appointment of the IRP on 11.12.2018, and the judgment is to be communicated to both parties.
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