2019 (2) TMI 1501 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - HELD THAT - The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government. Mr. C. Ramasubramaniam is hereby appointed as IRP, as has been proposed by the Operational Creditor. There is no disciplinary proceeding pending against the IRP as is evidenced from Form-2. The IRP is directed to take charge of the Corporate Debtor s management immediately. IRP is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date the copy of this Order is received, and call for submissions of claim by the creditors in the manner as prescribed. IRP shall comply with the provisions of Sections 13(2), 15, 17 & 18 of the Code. The Directors of the Corporate Debtor, its Promoters or any person associated with the management of the Corporate Debtor are/is directed to extend all assistance and cooperation to the IRP as stipulated under Section 19 for the purpose of discharging his functions under Section 20 of the I&B Code, 2016. The Operational Creditor and the Registry are directed to send the copy of this Order to IRP with immediate effect, so that he could take charge of the Corporate Debtor s assets etc., and make compliance with this Order as per the provisions of I&B Code, 2016.

Summary

Issues:
Admission of application under Section 9 of the Insolvency & Bankruptcy Code, 2016 - Prayer for initiating Corporate Insolvency Resolution Process, declaring moratorium, and appointing Interim Resolution Professional.

Analysis:
The Operational Creditor filed an application under Section 9 of the Insolvency & Bankruptcy Code, 2016 seeking admission to initiate Corporate Insolvency Resolution Process against the Corporate Debtor. The Operational Creditor claimed an outstanding amount against the Corporate Debtor, which the latter failed to pay. The relationship between the parties involved the supply of yarn by the Operational Creditor to the Corporate Debtor for converting into grey fabric on a job work basis. Disputes arose when the Corporate Debtor did not hand over the entire physical stocks of goods to the Operational Creditor, leading to the latter raising invoices for the shortfall quantity. The Corporate Debtor acknowledged the debt due to the Operational Creditor in email communications and failed to respond to demand notices sent regarding the unpaid operational debt.

The Operational Creditor fulfilled all legal requirements for admission of the application, including sending demand notices and filing necessary affidavits. The Tribunal found that the Corporate Debtor had defaulted in making payment of the outstanding debt claimed by the Operational Creditor. Consequently, the application was admitted, and the Corporate Insolvency Resolution Process was initiated. A moratorium was declared from the date of the order until the completion of the resolution process, prohibiting various actions against the Corporate Debtor. An Interim Resolution Professional (IRP) was appointed to manage the affairs of the Corporate Debtor, with directions to make a public announcement and call for creditor claims. The Directors and management associated with the Corporate Debtor were instructed to cooperate with the IRP. The Registry was tasked with communicating the order to all relevant parties, including the IRP, Operational Creditor, and Corporate Debtor.