2020 (2) TMI 48 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of debt - existence of debt and dispute or not - HELD THAT - The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudging Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

Issues:
1. Initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency & Bankruptcy Code, 2016.
2. Default in payment by the Corporate Debtor leading to the petition.
3. Examination of documents and correspondence to establish default and debt.
4. Admission of the petition and order for initiation of CIRP against the Corporate Debtor.
5. Moratorium under section 14 of the IBC and related implications.
6. Appointment of Interim Resolution Professional (IRP) and management during CIRP.
7. Financial obligations and directions for the Operational Creditor.

Initiation of Corporate Insolvency Resolution Process:
The Company Petition was filed under section 9 of the Insolvency & Bankruptcy Code, 2016 by the Operational Creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, a private company limited by shares incorporated under the Companies Act, 2013. The petition was based on the Corporate Debtor's failure to make a payment of US $1,09,592.00 as principal, leading to the jurisdiction of the Tribunal to deal with the matter.

Default and Debt Examination:
The Operational Creditor's case was supported by agreements for the supply of New Zealand apples, invoices, and a Demand Notice served to the Corporate Debtor under section 8 of the IBC. Despite assurances and a Letter of Comfort Bond for Repayment, the Corporate Debtor failed to make the payment, establishing the default and debt due to the Operational Creditor.

Admission of the Petition:
After reviewing the documents and arguments, the Tribunal found that the Operational Creditor had supplied the goods as per the contracts, and the default of the debt exceeding the minimum amount stipulated under the IBC was established. Consequently, the Tribunal admitted the petition and ordered the initiation of CIRP against the Corporate Debtor.

Moratorium and Implications:
A moratorium was declared under section 14 of the IBC, affecting various actions related to suits, asset transfers, security interests, and property recovery concerning the Corporate Debtor. Essential supplies were protected during the moratorium, with specific transactions exempted. The moratorium would remain in effect until the completion of CIRP or other specified outcomes.

Appointment of IRP and Management:
As the Operational Creditor did not propose an Interim Resolution Professional (IRP), the Tribunal would appoint one, with directions for compliance with IBBI regulations. The management of the Corporate Debtor during the CIRP period would vest in the IRP or Resolution Professional (RP), with obligations on the officers and managers to cooperate and provide necessary information.

Financial Obligations and Directions:
The Operational Creditor was directed to deposit a specified sum with the IRP for expenses related to public notices and claims. The Registry was tasked with communicating the order to relevant parties promptly, and the Registrar of Companies was to update the Corporate Debtor's Master Data and provide a compliance report within a specified timeframe.

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