2019 (11) TMI 446 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor has defaulted in paying an amount - existence of debt and default or not - Section 9 of I B Code - HELD THAT - This Bench is of the view that the Operational Creditor has proved existence of debt and default, therefore, we hereby admit this company application looking at the consent given by Mr. P. Sriram with a direction to the Operational Creditor to pay remuneration to the IRP and his expenses until the constitution of CoC . Application admitted - moratorium declared.

Summary

Issues:
Insolvency & Bankruptcy Application under Section 9 of the Insolvency & Bankruptcy Code, 2016 for default in payment.

Analysis:
The Operational Creditor filed an Insolvency & Bankruptcy Application under Section 9 of the Code against the Corporate Debtor for defaulting on a payment of ?1,70,000 as per the invoice raised for accounting services. Despite demands and a Section 8 notice, the Corporate Debtor neither replied nor made the payment, leading to the initiation of the insolvency resolution process.

The Corporate Debtor argued that its liabilities exceed its assets, and it has not been operational since 2015-2016. While acknowledging the debt, the Corporate Debtor expressed an inability to pay. The Operational Creditor contended that the acknowledgment of debt by the Corporate Debtor justified seeking admission of the Company Petition.

The Tribunal found that the Operational Creditor substantiated the existence of the debt and default. Consequently, the Company Application was admitted, with directions for the Operational Creditor to remunerate the Interim Resolution Professional (IRP) and cover expenses until the formation of the Committee of Creditors (CoC).

The Tribunal declared a moratorium, prohibiting various actions against the Corporate Debtor, including legal proceedings, asset transfers, and enforcement of security interests. It also mandated the continuation of essential supplies to the Corporate Debtor during the moratorium period. The moratorium was effective from a specified date until the completion of the insolvency resolution process or liquidation, as determined by the Tribunal.

Furthermore, the Tribunal appointed Mr. P. Sriram as the Interim Resolution Professional, outlining his responsibilities under the Insolvency & Bankruptcy Code. The Registry was directed to communicate the order promptly to the Operational Creditor, Corporate Debtor, and the appointed Interim Resolution Professional via email.