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2020 (1) TMI 304 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor committed default in paying financial debt - debt due and payable - Section 7 of Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Corporate Debtor is served with the notice of this application. One of the directors of the Corporate Debtor, Mr. Arvind Bhawsinghka appeared on behalf of the Corporate Debtor and filed affidavit-in-reply dated 20.08.2019. The Corporate Debtor admitted the debt and default and also, they contended that time and again they have requested the Financial Creditor to restructure the loan but their request was not acceded to. The Corporate Debtor admitted the debt to be payable to the Financial Creditor and it is default on their part. These are only facts being considered for admission of the Corporate Debtor in CIRP under Section 7 of I B Code, 2016. The application is defect free. Application admitted - moratorium declared.
Issues Involved:
Application under Section 7 of Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process due to default in loan repayment. Analysis: The Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for defaulting on a loan of ?40 lakhs, with the last default occurring on 05.03.2019. The loan agreement allowed the Financial Creditor to recall the loan in case of default, leading to the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Corporate Debtor admitted the debt and default but claimed to have requested loan restructuring, which was not accepted by the Financial Creditor. The Tribunal found that the Corporate Debtor acknowledged the debt and default, making them eligible for admission into CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016. The application was deemed defect-free, leading to the admission of the application by the Financial Creditor. Consequently, the Tribunal issued orders for the declaration of moratorium, public announcement, and appointment of an Interim Resolution Professional (IRP) to manage the resolution process. The moratorium declared under Section 14 of the Insolvency and Bankruptcy Code, 2016 prohibited various actions against the Corporate Debtor, including legal proceedings, asset transfers, and recovery actions. Essential goods or services supply to the Corporate Debtor was to continue uninterrupted during the moratorium period. The order specified the effect of moratorium till the completion of the corporate insolvency resolution process, with provisions for its cessation upon approval of a resolution plan or liquidation order. Additionally, the order appointed Mr. Shashi Agarwal as the Interim Resolution Professional, with specific details of his appointment and responsibilities outlined. The Financial Creditor was directed to pay advance fees to the IRP, and the Resolution Professional was mandated to conduct the CIRP in a time-bound manner as per regulations. The Registry was instructed to communicate the order to all relevant parties, with a progress report filing scheduled for a future date. In conclusion, the judgment detailed the admission of the application under Section 7, the implications of the moratorium, the appointment of the IRP, and the procedural requirements for the Corporate Insolvency Resolution Process.
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