2020 (1) TMI 38 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment - existence of debt and dispute or not - section 7 of the I B Code - HELD THAT - This Applicant/Financial Creditor has proved existence of debt and default. Moreover, no dispute has been raised by the Corporate Debtor before the receipt of Section 8 Notice - Application deserves to be admitted. Application admitted - moratorium declared.

Summary

Issues:
Insolvency & Bankruptcy Application u/s 7 of I & B Code for CIRP due to default in repayment by Corporate Debtor.

Analysis:
The Applicant, a Financial Creditor, filed an Insolvency & Bankruptcy Application u/s 7 of the I & B Code against the Corporate Debtor for initiation of Corporate Insolvency Resolution Process (CIRP) due to default in repayment of a substantial amount. The Applicant, acting as Debenture Trustee, highlighted the issuance of debentures by the Issuer Company, guaranteed by the Corporate Debtor. Despite various notices and responses seeking payment, the default remained unresolved, leading to the application for CIRP. The Applicant substantiated the debt and default through a series of documents, including balance sheets, emails, notices, and replies, establishing the acknowledgment of the outstanding amount and the default date. The Corporate Debtor acknowledged the default but failed to make the payment, prompting the initiation of the insolvency process.

The Tribunal, after reviewing the evidence presented, concluded that the Applicant had sufficiently proven the existence of debt and default by the Corporate Debtor. Notably, the Corporate Debtor did not dispute the debt before receiving the Section 8 Notice. Consequently, the Tribunal admitted the Application and appointed an Interim Resolution Professional (IRP) to oversee the process. The Tribunal declared a moratorium, prohibiting various actions against the Corporate Debtor, ensuring the continuity of essential supplies, and specifying the effect and duration of the moratorium until the resolution process's completion. The public announcement of the insolvency resolution process was mandated, and the IRP's appointment details were specified for compliance with relevant regulations.

In conclusion, the Tribunal admitted the Application, imposed a moratorium, appointed an IRP, and outlined specific directions to facilitate the Corporate Insolvency Resolution Process. The decision was communicated promptly to the involved parties, marking the commencement of the resolution proceedings.