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2020 (5) TMI 151 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - There is clear cut admission on the part of the Corporate Debtor about its inability to clear the Operational debt, in terms of the letter dated 18-11-2016. Further, in the reply dated 16-9-2019 also, the Corporate Debtor has stated categorically in para 4 at p.2 thereof, that the Respondent is in grave financial crisis and is not in a position to repay the amount to the Petitioner - 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 Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Application admitted - moratorium declared.
Issues:
- Company Petition filed under section 9 of the Insolvency & Bankruptcy Code, 2016 (IBC) by the Operational Creditor seeking Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. - Admission of liability by the Corporate Debtor and its inability to repay the debt. - Completeness of the application made by the Operational Creditor. - Appointment of Interim Resolution Professional (IRP) and management during the Corporate Insolvency Resolution Process (CIRP). Analysis: 1. The Company Petition was filed under section 9 of the IBC by the Operational Creditor, an unlisted public company, against the Corporate Debtor, a private company, for non-payment of a substantial sum. The Operational Creditor claimed that the Corporate Debtor failed to make payment of over Rupees forty crore as of the date of default. The Operational Creditor provided evidence of invoices raised and a demand notice served to the Corporate Debtor, who acknowledged the debt but cited financial crisis as a reason for non-payment. 2. The Corporate Debtor, in its reply, admitted the liability but stated its financial difficulties due to market recession. Despite expressing willingness to pay, the Corporate Debtor requested time and a repayment schedule to clear the dues. The Adjudicating Authority noted the clear admission of debt and default by the Corporate Debtor, establishing the existence of the debt. 3. The Operational Creditor's petition was found to be complete as per the legal requirements, showcasing the default by the Corporate Debtor of a debt exceeding the minimum amount stipulated under the IBC. The Adjudicating Authority, based on the evidence and submissions, admitted the petition and ordered the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. 4. Following the admission of the petition, the Adjudicating Authority issued various orders, including the declaration of a moratorium under section 14 of the IBC, appointment of an Interim Resolution Professional (IRP), and vesting of management in the IRP during the CIRP period. The Operational Creditor was directed to deposit a sum for expenses, and communication of the orders was mandated to relevant parties and authorities for compliance. In conclusion, the judgment detailed the process of admitting a Company Petition under the IBC, considering the admission of liability by the Corporate Debtor, completeness of the application, and subsequent orders for the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, including the appointment of an Interim Resolution Professional (IRP) and management directives during the CIRP period.
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