2019 (10) TMI 621 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - default in payment of instalments on the part of Corporate Debtor - existence of debt - 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 Process, 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 declared.

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).
2. Default in repayment of loan by the respondent company.
3. Appointment of an interim resolution professional.
4. Adjudication of the application under Section 7(2) of the Code.
5. Declaration of moratorium under Section 14 of the Code.

Analysis:
1. The Financial Creditor filed a petition seeking reliefs under Section 7 of the Insolvency and Bankruptcy Code, 2016, citing default by the respondent company in repaying a term loan facility. The respondent company had failed to pay the pending instalments, leading to a total due amount of ?11,45,926. The applicant provided evidence of the debt and default, including various security documents and communication records. Despite the respondent's absence in the proceedings, the Adjudicating Authority found the claim valid and not barred by limitation.

2. Referring to a previous judgment, the Adjudicating Authority confirmed the occurrence of default and completeness of the application. The documents presented by the Financial Creditor established the debt and default on the part of the Corporate Debtor. The Authority appointed an interim resolution professional and declared the application complete under Section 7(2) of the Code, fulfilling all requirements for admission.

3. The Financial Creditor's compliance with the prescribed form and fee, along with the proposal for an interim resolution professional, led to the appointment of CA Shreyans Shah. The Authority verified the absence of any disciplinary proceedings against the proposed professional, ensuring the completeness of the application and the appointment process.

4. Subsequently, the petition was admitted, and a moratorium was declared under Section 14 of the Code, prohibiting various actions against the corporate debtor, including legal proceedings, asset disposal, and recovery of security interests. The order specified the continuation of essential services to the Corporate Debtor during the moratorium period, with exceptions as notified by the Central Government in consultation with financial regulators.

5. The order of moratorium was set to remain in effect until the completion of the corporate insolvency resolution process or until the approval of a resolution plan or liquidation order. The petition was disposed of with no costs, and communication of the order was directed to the relevant parties involved, including the Applicant, Financial Creditor, Corporate Debtor, and the Interim Insolvency Resolution Professional.