2022 (6) TMI 168 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Personal Guarantors to Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT - The Application has been filed in respect of debts which are not excluded debts as enumerated under Section 79(15)(e) of the Code. It is noted that no application under Chapter III of Part III of the Code has been admitted before this Adjudicating Authority in respect of the Applicant/Debtor during twelve months preceding the date of submission of the instant Application. The Applicant has filed an affidavit stating that she is not barred in terms of Section 94(4) of the Code. The Application under consideration is in a Form-A format and accompanied with the required fees as prescribed and contains the required details. Thus, prima facie the requirements of Section 94 of the Code are fulfilled. As stipulated under Section 96(1) of the Code interim moratorium commences from the date of filing of the Application under Section 94 or 95. Accordingly, in the instant matter interim moratorium commences from 04.01.2022 i.e., from the date of filing of the instant Application, concerning all the debts, and interim moratorium shall cease to have effect from the date of admission of the Application - As per Rule 6(2) of the Rules, the Guarantor has served a copy of this application to every financial creditor and the corporate debtor for whom the guarantor is a personal guarantor. It is seen that the Guarantor has annexed proof of service to the creditors and Corporate Debtor in form of postal slips. In this respect, the Applicant had been directed to file an affidavit of service to the creditors and Corporate Debtor along with a tracking report, the same has been filed vide Diary No. 225/2022 dated 27.01.2022. Application admitted - moratorium declared.

Summary

Issues:
1. Initiation of insolvency resolution process against a personal guarantor.
2. Default on personal guarantee obligations.
3. Admittance of application under Section 94(1) of the Insolvency and Bankruptcy Code, 2016.
4. Fulfillment of requirements under Section 94 of the Code.
5. Commencement of interim moratorium.
6. Appointment of Resolution Professional.
7. Powers and duties of the Resolution Professional.

Analysis:

1. The judgment pertains to the initiation of the insolvency resolution process against a personal guarantor, Ms. Anuradha Choudhary, for M/s. Emgee Cables & Communications Pvt. Ltd. The application was filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016, seeking to resolve the insolvency issues related to the personal guarantee provided by the applicant.

2. The applicant failed to fulfill her obligations under the personal guarantee, leading to default. The default amount was stated to be Rs. 46,85,91,393/-, with the default date noted as 31.03.2018. The applicant was found to be eligible to file the insolvency resolution application under the relevant provisions of the Code.

3. The application met the requirements of Section 94 of the Code, as debts were not excluded, no prior application was admitted, and the applicant was not barred under Section 94(4) of the Code. The application was in the prescribed format, accompanied by necessary fees, and contained all required details, fulfilling the prima facie requirements.

4. Interim moratorium commenced from the date of filing the application, leading to a stay on legal actions or proceedings related to debts. Creditors were prohibited from initiating legal actions during this period, ensuring a temporary halt in debt recovery actions against the applicant.

5. A Resolution Professional, Mr. Vishnu Upadhyay, was appointed by the Authority as the RP in the matter. The RP was tasked with exercising powers under Section 99 of the Code, rechecking information availability, making recommendations on the application, and providing reports to relevant parties within the stipulated time.

6. The Resolution Professional was directed to ensure compliance with relevant rules and forms, provide copies of reports to all concerned parties, and maintain communication with the Applicant, Financial Creditors, and related Corporate Debtors. The Applicant was also instructed to provide a copy of the application to IBBI for record-keeping purposes.

7. The judgment concluded with the admission of the insolvency resolution application, with further directives issued to the Applicant, her counsel, and the Resolution Professional regarding the dissemination of orders, documents, and information for the effective progression of the insolvency resolution process.