2019 (5) TMI 1105 - Tri - Insolvency and Bankruptcy

Admission of application - Operational Creditor - Invocation of provisions of Section 9 of the Insolvency Bankruptcy Code, 2016 against the Corporate Debtor - HELD THAT - The default as defined u/s. 3(12) of The Code is established. Demand Notice has been issued to the Respondent Debtor, however, not replied to the said Demand Notice within the prescribed time period of 10 days u/s.8(2) of The Code nor made the payment. Keeping the admitted facts in mind that the Operational Creditor had not received the outstanding Debt from the Corporate Debtor so far and that the formalities as prescribed under The Code have been completed by the Petitioner/ Operational Creditor, it is my conscientious view that this Petition deserves Admission - Upon Admission of the Application and Declaration of Moratorium the Insolvency Process such as Public Announcement etc. shall be made immediately as prescribed under section 13 read with section 15 of The Code. Application admitted.

Issues:
1. Petition filed by Operational Creditor under Section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Outstanding operational debt claimed against the Corporate Debtor.
3. History of the case and payment disputes between the parties.
4. Failure of the Corporate Debtor to respond to demand notices.
5. Decision on admission of the petition and appointment of an Interim Resolution Professional.
6. Implementation of moratorium and commencement of Corporate Insolvency Resolution Process.

Analysis:

1. The petition was filed by an Operational Creditor invoking Section 9 of the Insolvency & Bankruptcy Code, 2016, against the Corporate Debtor to claim an outstanding operational debt of USD 10,99,115/- plus interest. The debt arose from a Sale Contract for Hot Rolled Steel Coils, and despite various communications and agreements, the Corporate Debtor failed to make the payments as per the agreed terms.

2. The history of the case revealed that the Operational Creditor had shipped the steel coils and raised invoices, but the Corporate Debtor did not make the payments within the stipulated time frame. Despite reminders and agreements to pay, the outstanding amount of USD 1,099,115.27 remained unpaid by the Corporate Debtor.

3. The Tribunal found that the Corporate Debtor failed to respond to demand notices and did not dispute the claim made by the Operational Creditor. Various communications, including emails and letters, confirmed the debt owed by the Corporate Debtor, but no payment was made, leading to the initiation of insolvency proceedings.

4. After considering all the facts and circumstances of the case, the Tribunal concluded that the default by the Corporate Debtor was established as per the provisions of the Insolvency & Bankruptcy Code. Despite being given opportunities to defend the case, the Corporate Debtor did not appear, leading to the admission of the petition by the Tribunal.

5. The Tribunal admitted the petition and appointed an Interim Resolution Professional to oversee the insolvency resolution process. The IRP was tasked with informing the progress of the resolution plan and ensuring compliance with the Tribunal's directions within a specified timeframe, in accordance with the provisions of the Code.

6. Following the admission of the petition, the provisions of moratorium were implemented as per Section 14 of the Code. This meant that legal proceedings against the Corporate Debtor were prohibited, and the assets could not be liquidated during the insolvency resolution process. Essential supplies to the Corporate Debtor were allowed to continue, and the Corporate Insolvency Resolution Process was set to commence from the date of the Tribunal's order.

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