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2022 (2) TMI 673 - Tri - Insolvency and BankruptcyMaintainability 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 - As per the Insolvency and Bankruptcy Code, 2016 the definition of Financial Creditor under Section 5(7) means any person to whom a Financial Debt is owed and includes a person to whom such debt has been legally assigned or transferred to; thereby the applicant herein is a Financial Creditor. It is manifest and seen from the Loan Agreement dated 13.06.2016 annexed along with the application in page number 18 that money had been lent by the Financial Creditor herein in accordance with the loan agreement dated 13.06.2016 which would have the commercial effect of borrowing on the part of the Corporate Debtor. Thereby, on verification of the documents annexed it is clear that the amount disbursed is a debt on the part of the Corporate Debtor. Thus, it is evident that there exists a 'debt' between the parties and the said debt qualifies to be a 'financial debt' as defined under 5(8)(c) of IBC, 2016 and also the Corporate Debtor has defaulted in repayment of the said 'financial debt' which is due and payable to the Financial Creditor - in view of absence of any objections by the Corporate Debtor this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor. Taking into consideration the facts and circumstances of the case as well as the position of Law, this Application as filed by the Applicant, Financial Creditor is required to be Admitted under Section 7(5) of the IBC, 2016 - Application admitted - moratorium declared.
Issues:
Application under Section 7 of the Insolvency & Bankruptcy Code 2016 for Corporate Insolvency Resolution Process. Analysis: The application was filed by a Financial Creditor against a Corporate Debtor seeking to initiate the Corporate Insolvency Resolution Process. The Financial Creditor provided details of the debt, including loan agreements, communication letters, and evidence of default. The Financial Creditor claimed that the Corporate Debtor defaulted on repayment, leading to the application. The Corporate Debtor did not file any representation or counter, and the matter proceeded in their absence. The Tribunal considered the definition of a Financial Creditor under the Insolvency and Bankruptcy Code, 2016, and found that the applicant qualified as a Financial Creditor based on the loan agreements and evidence provided. It was established that there was a financial debt owed by the Corporate Debtor to the Financial Creditor, and the Corporate Debtor defaulted on repayment. Due to the absence of objections from the Corporate Debtor, the Tribunal decided to admit the application and initiate the Corporate Insolvency Resolution Process against the Corporate Debtor. The Tribunal appointed an Interim Resolution Professional (IRP) to oversee the resolution process. The IRP was tasked with following the statutory requirements and filing a report within 20 days. The powers of the Board of Directors of the Corporate Debtor were superseded upon initiation of the Corporate Insolvency Resolution Process. Upon admission of the application under Section 7 of the Code, a moratorium was imposed on the Corporate Debtor as per Section 14(1) of the Code. The moratorium prevented the institution of suits, transfer of assets, enforcement of security interests, and recovery of property against the Corporate Debtor. Essential supplies to the Corporate Debtor were to continue during the moratorium period to maintain operations. The duration of the moratorium would last until the completion of the Corporate Insolvency Resolution Process, with provisions for cessation upon approval of a Resolution Plan or liquidation order. The Tribunal communicated the order to the parties involved, the Insolvency and Bankruptcy Board of India (IBBI), and the Registrar of Companies. The initiation of the Corporate Insolvency Resolution Process was formally notified to the relevant authorities.
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