2021 (7) TMI 242 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - The Financial Creditor has succeeded to make out a case for triggering the Corporate Insolvency Resolution Process. The material on record clearly goes to show that the Corporate Debtor had availed the loan facility and has committed default in the payment of the said debt amount. The applicant 'financial creditor' has placed on record evidence in support of the claim as well as to prove the default. There is no bar for Financial Creditor from proceeding under the provisions of Code. There is no document placed on record by Corporate Debtor to show that payment of debt, as claimed by the applicant, is made or is not due and payable. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code - thus, a default has occurred and debt has remained unpaid. Thus, the application warrants admission as it is complete in all respects and is admitted initiating CIRP as prescribed under the Code. The scheme is approved - moratorium declared - application allowed.

Summary

Issues:
1. Application under Section 7 of The Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Default in repayment of loan by the Corporate Debtor.
3. Admission of the application and appointment of Insolvency Resolution Professional.
4. Directions regarding moratorium, expenses deposit, and communication of the order.

Analysis:
1. The application was filed under Section 7 of The Insolvency and Bankruptcy Code, 2016 by the Financial Creditor, claiming default in repayment of a loan by the Corporate Debtor. The Financial Creditor provided evidence of the loan agreement and default, seeking initiation of Corporate Insolvency Resolution Process against the respondent company, M/s. Virtual Business Solutions Pvt. Ltd.

2. The Corporate Debtor failed to adhere to the repayment schedule and defaulted on the loan. Despite reminders and legal notices, no payment was received. During the hearing, the Corporate Debtor did not file a reply and accepted the default. The Tribunal found that the Financial Creditor had made a case for triggering the insolvency process, as the Corporate Debtor had availed the loan facility and defaulted on repayment.

3. The Tribunal admitted the application as the default was established, and the application was complete. The Insolvency Resolution Professional, Mr. Vinay Kumar Singhal, was appointed after satisfying the requirements of the Code. The Interim Insolvency Resolution Professional was directed to make a public announcement, and moratorium under Section 14(1) of the Code was imposed on the Corporate Debtor.

4. The Financial Creditor was directed to deposit a sum for expenses with the Interim Resolution Professional. The registry was instructed to communicate the order to all relevant parties promptly. The order outlined the procedures to be followed during the moratorium period and emphasized compliance with the regulations for the Insolvency Resolution Process for Corporate Persons.

This detailed analysis covers the key issues addressed in the judgment, including the application under Section 7, default by the Corporate Debtor, admission of the application, appointment of the Insolvency Resolution Professional, and the subsequent directions regarding moratorium, expenses deposit, and communication of the order.