2019 (9) TMI 332 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of Corporate Insolvency Resolution Process - repayment of outstanding dues - corporate debtor - existence of debt and default - HELD THAT - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the Corporate Debtor committed default in paying the financial debt to the Applicant. As can be seen from the Written Communication of the proposed Insolvency Resolution Professional, no disciplinary proceedings are pending against him. In the instant case, the documents produced by the Financial Creditor clearly establish the debt and there is a default on the part of the Corporate Debtor in payment of the financial debt . 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 - petition admitted - moratorium admitted.

Summary

Issues Involved:
1. Application 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.
2. Default in payment of financial debt by the Corporate Debtor.
3. Admittance of debt by the Corporate Debtor and recommendation to commence insolvency proceedings.
4. Satisfaction of requirements under Section 7 of the Code for admitting the petition.

Detailed Analysis:

Issue 1: Application under Section 7 of The Insolvency and Bankruptcy Code
The applicant, a financial creditor, filed a petition under Section 7 of the Code seeking reliefs under specific sections. The applicant company provided financial assistance to the respondent company, which resulted in a default on payment.

Issue 2: Default in Payment of Financial Debt
The respondent company admitted the debt owed to the financial creditor, acknowledging the default in payment. The financial creditor had sanctioned a loan, and a specific amount was still unpaid by the respondent, leading to the initiation of insolvency proceedings.

Issue 3: Admittance of Debt and Recommendation for Insolvency Proceedings
The respondent, through its director, accepted the claim of the financial creditor but stated financial difficulties prevented timely repayment. The respondent recommended commencing insolvency proceedings due to multiple insolvency applications faced by the company.

Issue 4: Satisfaction of Requirements under Section 7 of the Code
The Tribunal found that the respondent had admitted the debt, satisfying the requirement for default under the Code. The application was complete, supported by relevant documents establishing the financial debt and default. The proposed interim resolution professional also met the necessary criteria.

The Tribunal, based on the findings, admitted the petition, declared a moratorium, and directed the continuation of essential services to the Corporate Debtor. The moratorium would remain in effect until the completion of the insolvency resolution process or liquidation approval. The order was communicated to all relevant parties, concluding the disposition of the petition without costs.