2020 (9) TMI 554 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - It is settled position of law that once debt and default is proved to the satisfaction of the Adjudicating Authority, the case has to be admitted to initiate CIRP, and appoint IRP, etc. - We are satisfied with the reasons cited by the Petitioner to initiate CIRP. The instant Company Petition is filed in accordance with law. Petition admitted - moratorium declared.

Summary

Issues involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the IBC, 2016.
2. Admittance of the application by the Adjudicating Authority.
3. Appointment of Interim Resolution Professional.
4. Declaration of moratorium and consequential directions.

Detailed Analysis:
1. The case involves the filing of C.P. (IB) No. 96/BB/2020 by the Director of a company seeking to initiate CIRP due to default in payment of a total amount, including dues to Financial Creditors and Operational Creditors. The company faced financial difficulties and was unable to repay its debts due to an unfavorable business environment. The special resolution passed by the members authorized the initiation of CIRP under Section 10 of the IBC, 2016.

2. The Adjudicating Authority examined the application in accordance with Section 10 of the IBC, 2016, which allows a Corporate Applicant to seek initiation of CIRP by submitting necessary information and resolutions. The Authority admitted the application after verifying completeness and absence of pending disciplinary proceedings against the proposed Resolution Professional. The decision was based on the company's financial position and default in repayment of debts over the years.

3. An Interim Resolution Professional was appointed to manage the Corporate Insolvency Resolution Process. The appointed professional was required to strictly adhere to the provisions of the Insolvency and Bankruptcy Code, 2016, and relevant rules. The moratorium was declared to prevent legal actions against the company, asset transfers, enforcement of security interests, and supply disruptions during the resolution process. The IRP was directed to provide progress reports and the company's Board of Directors and staff were instructed to cooperate with the IRP.

4. The consequential directions included specific provisions regarding the moratorium, exceptions for pending cases before higher courts, compliance with IBC rules, and the obligation of the company's management to support the IRP. The case was scheduled for a follow-up report by the IRP on a specified date to monitor the progress of the resolution process.