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2019 (11) TMI 294 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of debt and default or not - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - After having gone through the documentation reflecting the Corporate Debtor availing the credit facilities in respect of loan amounts from the Original Lender, thereafter the Bank declaring this loan as NPA on 14.09.2014, since there being regular correspondence between the Corporate Debtor and the Original Lender reflecting acknowledgement of this debt from time to time, this Bench is satisfied that this claim is within the time prescribed under the Limitation Act - As the applicant has placed material reflecting existence of debt as well as default, it is opined that the Financial Creditor established existence of debt as well as existence of default . Petition admitted - moratorium declared.
Issues:
Insolvency and Bankruptcy Application u/s. 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor due to default in repayment. Analysis: The judgment pertains to an Insolvency and Bankruptcy Application filed under section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on a substantial loan amount. The application details the history of credit facilities availed by the Corporate Debtor from Indian Overseas Bank, with subsequent revisions over the years. The Corporate Debtor defaulted on repayment, leading to the current insolvency proceedings. The application includes a comprehensive breakdown of the various credit facilities availed, revised limits, and the corresponding defaults. The Corporate Debtor provided multiple properties as security against the loans, including sites and buildings in specific locations, and a mill godown property. Additionally, a Hypothecation Deed was executed to secure inventory, book debts, and other assets. The estimated value of the secured assets is highlighted in the application, along with the registration of charges with the Registrar of Companies (RoC) and the submission of necessary forms. The Financial Creditor, who acquired the loan from the original lender through an Assignment Deed, substantiated the claim with relevant documents and certificates. The judgment discusses the acknowledgment of debt by the Corporate Debtor through various communications and a subsequent one-time settlement offer, which was rejected by the Financial Creditor due to its terms. Legal proceedings initiated by the Original Lender in the Debt Recovery Tribunal (DRT) are outlined, indicating ongoing litigation against the Corporate Debtor. The balance sheet of the Corporate Debtor as of a specific date is presented, reflecting the liability towards long-term borrowings and the assignment of debt to the Financial Creditor. The judgment acknowledges the admission of the claim by the Corporate Debtor's counsel and validates the existence of debt and default based on the provided evidence. Consequently, the application is admitted, appointing an Interim Resolution Professional (IRP) and declaring a moratorium on certain actions against the Corporate Debtor. The order specifies the moratorium period, restrictions on asset disposal, and the appointment of the IRP to oversee the insolvency resolution process. The judgment concludes by directing the communication of the order to all relevant parties involved. This detailed analysis of the judgment highlights the key legal and factual aspects considered by the Tribunal in deciding to admit the Insolvency and Bankruptcy Application and initiate the Corporate Insolvency Resolution Process against the Corporate Debtor based on the established default and debt obligations.
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