2019 (2) TMI 885 - Tri - Insolvency and Bankruptcy

Corporate Insolvency process - default in payment of the operational debt - Held that - The present application is complete and the Applicant is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted. As a consequence of the above facts and record, application is admitted in terms of Section 9(5) of IBC, 2016 moratorium as envisaged under the provisions of Section 14(1) and as extracted hereunder shall follow in relation to the Corporate Debtor prohibiting accordingly.

Summary

Issues:
- Application under Section 9 of Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency process against a company.
- Default in payment of operational debt by the company.
- Admission of liability by the company towards the operational creditor.
- Appointment of Interim Resolution Professional.

Analysis:
1. Application under Section 9 of IBC, 2016: The application was filed by the Applicant, the Operational Creditor, seeking initiation of Corporate Insolvency process against the Respondent company, citing outstanding dues of ?33,04,645. The Applicant had fulfilled all obligations under work orders issued by the Respondent for fabrication and erection work, leading to the unpaid debt.

2. Default in Payment of Operational Debt: The Respondent company failed to pay the outstanding dues despite multiple reminders and a legal notice demanding payment. The Applicant established the default in payment of operational debt, amounting to ?33,04,645 along with interest at 18%.

3. Admission of Liability by the Company: In response to the demand notice under Section 8 of the Code, the Corporate Debtor admitted its liability towards the Operational Creditor but cited financial difficulties in arranging funds for payment. The Corporate Debtor failed to make any payment despite commitments and negotiations for settlement.

4. Appointment of Interim Resolution Professional: The Tribunal appointed Mr. Devendra Singh as the Interim Resolution Professional (IRP) for the Corporate Debtor. The IRP was directed to take necessary steps under relevant sections of the Code and file a report within the statutory period. The order was communicated to both parties and the IRP, with a copy forwarded to IBBI for records.

In conclusion, the Tribunal admitted the application under Section 9(5) of IBC, 2016, establishing the default in payment and appointing an IRP to oversee the Corporate Insolvency resolution process. The moratorium was imposed on the Corporate Debtor, prohibiting certain actions related to its assets and legal proceedings.