2019 (4) TMI 1273 - Tri - Insolvency and Bankruptcy

Maintainability of petition - existence of default or not - requirement of fulfillment of conditions on the part of financial creditor - section 7 of The Insolvency and Bankruptcy Code, 2016 read with Rule 4 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - There is no dispute in the case that the petitioner is the financial creditor. More so when the corporate debtor has admitted the debt by way of an affidavit in reply. The application is also furnished in the prescribed form - I of the Rules and the prescribed fee has also been paid. Along with the application, the applicant proposed the name of the Resolution Professional namely Shri Bhavi Shreyans Shah, CA to act as an interim resolution professional. Form 2 along with the certificate of registration of the proposed interim resolution professional has been annexed and placed at page No. 61 of the application where declaration is made that no disciplinary proceeding is pending against him with the Board or Indian Institute of Insolvency Professionals of ICAI. There is existence of default and that the application under Section 7(2) of the Code is also complete in all respect. The petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted - moratorium is also declared for prohibiting all of the following in terms of sub-section (1) of Section 14 of the Code

Summary

Issues Involved:
Petition under section 7 of The Insolvency and Bankruptcy Code, 2016 seeking reliefs under Section 7(5)(a) and Section 13(l)(a)(b)(c) of the Code.

Analysis:

1. Background and Parties Involved:
- The petitioner, a financial company, filed a petition under section 7 of The Insolvency and Bankruptcy Code, 2016 against the respondent company, seeking reliefs under specific sections of the Code. The respondent company was the original corporate debtor of the petitioner's group company, which underwent a demerger, transferring all debts to the present respondent.

2. Loan Facility and Defaults:
- The respondent company availed a term loan facility from the petitioner's group company for purchasing machinery but defaulted on repayments, leading to a significant outstanding amount. The petitioner maintained records of the default and the outstanding dues, justifying the classification of the debt as a financial debt under the Code.

3. Admission of Debt and Financial Distress:
- The respondent admitted the debt and financial distress due to industry challenges and policy changes. The respondent submitted a Board Resolution acknowledging the financial situation.

4. Application and Compliance:
- The petitioner filed a complete application under Section 7(2) of the Code, with all necessary documents and fees paid. The Resolution Professional's appointment was proposed, meeting the prescribed requirements.

5. Decision and Moratorium:
- The Tribunal found the existence of default and completeness of the application, leading to the admission of the petition. A moratorium was declared under Section 14 of the Code, prohibiting various actions against the corporate debtor. The order specified the continuation of essential services and goods supply to the debtor during the moratorium period.

6. Conclusion and Disposal:
- The petition was admitted, and the moratorium order was issued until the completion of the insolvency resolution process. The order highlighted the effective date of the moratorium and exceptions to specific transactions. The communication of the order was directed to relevant parties and professionals involved.

This detailed analysis covers the key aspects of the judgment, including the petition, defaults, admission of debt, compliance, decision, and the moratorium order, providing a comprehensive understanding of the legal proceedings.