2019 (11) TMI 185 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repaying the loan availed by it from the Financial Creditor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The corporate debtor in the instant case did not turn up to contest the petition. The applicant has produced all the required documents. The existence of default also stands proved. The applicant here, in this case, succeeds in proving that it has complied with all the requirements to be meted out under Section 7(3) of the I B Code, 2016. Therefore, the application is liable to be allowed. Application admitted - moratorium declared.

Summary

Issues:
Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against a Corporate Debtor due to default in loan repayment.

Analysis:
The Financial Creditor filed an application under Section 7 of the I & B Code against the Corporate Debtor, alleging default in repaying a loan amount of ?3,55,89,295 as per the Sanction Letter dated 25.10.2008. The Corporate Debtor's account was classified as a non-performing asset in 2011, leading to subsequent legal actions. The Financial Creditor sent multiple demand notices, including under the SARFAESI Act, 2002, but the Corporate Debtor failed to repay the outstanding amount, prompting the current insolvency application.

The Financial Creditor submitted various documents as evidence, including the Sanction Letter, loan agreements, CIBIL extract, account statements, and demand notices. The application also proposed an Interim Resolution Professional. The Financial Creditor argued that the Corporate Debtor's default was proven through these documents and compliance with legal requirements, leading to the application's validity.

Despite the Corporate Debtor's absence in contesting the petition, the Tribunal found the Financial Creditor's evidence sufficient to establish default and compliance with Section 7(3) of the I & B Code. Consequently, the application was admitted, declaring a moratorium and initiating the Corporate Insolvency Resolution Process. The Tribunal appointed an Interim Resolution Professional and outlined the moratorium's implications, including restrictions on legal actions against the Corporate Debtor and the continuation of essential services.

The order mandated the Interim Resolution Professional to convene a Creditors' Committee meeting and identify a Resolution Applicant within a specified timeline. The Tribunal directed the registry to communicate the order to all relevant parties and set a date for a progress report filing. Additionally, the Financial Creditor was instructed to pay the Interim Resolution Professional's fees and comply with formalities for issuing certified copies of the order to concerned parties.