2018 (4) TMI 1986 - Tri - Insolvency and Bankruptcy

Admission of section 7 application - Debtor has defaulted in making payment of 886 Crores to the Financial Creditor - HELD THAT - By going through the pleadings on record and submissions made it can be carved out that the Financial Creditor has duly sanctioned and disbursed the various loan facilities and the Debtor had also availed the same - it is also established by the Financial Creditor that the nature of Debt is a Financial Debt as defined under section 5 (8) of the Code. It has also been established that admittedly there is a Default as defined under section 3 (12) of the Code on the part of the Corporate Debtor as the Debtor is failed in make payment of outstanding loan amount. After the lapse of opportunity to reply and keeping admitted facts in mind that the Financial Creditor had not received the outstanding Debt from the Debtor and that the formalities as prescribed under the Code have been completed by the Financial Creditor it is my conscientious view that this Petition deserves 'Admission' - Having admitted the Application, the provisions of Moratorium as prescribed under Section 14 of the Code shall be operative henceforth with effect from the date of order shall be applicable by prohibiting institution of any Suit before a Court of Law, transferring/encumbering any of the assets of the Debtor etc. Petition admitted.

Summary

Issues Involved:
1. Admission of Petition/Application by Financial Creditor against Debtor for default in loan repayment under Section 7 of Insolvency and Bankruptcy Code.

Detailed Analysis:

Admission of Petition/Application:
The Financial Creditor, IDBI Bank Limited, filed a Petition/Application against the Debtor, M/S. EPC Constructions India Private Limited, for defaulting on a loan amount of 886 Crores. The Financial Creditor invoked Section 7 of the Insolvency and Bankruptcy Code, submitting that the Debtor had availed various loan facilities and defaulted in repayment. The Financial Creditor provided evidence of disbursing loans, issuing demand letters, and recording defaults with relevant authorities. The Debtor accepted the default due to financial difficulties but did not oppose the Petition/Application's admission, agreeing to cooperate in the Corporate Insolvency Resolution Process (CIRP).

Findings and Order:
The Member (J) analyzed the submissions and records, confirming that the Financial Creditor had sanctioned and disbursed loans to the Debtor, leading to a total outstanding amount of 969,17,72,492/-. The nature of the debt qualified as "Financial Debt" under the Code, and a default was established under Section 3 (12) of the Code. Despite granting time to the Debtor to file a reply, no response was received, and the default was admitted. The Member (J) found the Petition/Application complete as per Section 7 of the Code, leading to the admission of the Petition/Application.

Appointment of Interim Resolution Professional:
Following the admission, an Insolvency Professional, Mr. Abhijit Guhathakurtha, was proposed and appointed as the Interim Resolution Professional (IRP) to oversee the Insolvency Resolution Process. The Moratorium under Section 14 of the Code was imposed, prohibiting legal actions against the Debtor and asset transfers. Essential supplies to the Debtor were to continue, and a Public Announcement of the CIRP initiation was mandated. The IRP was tasked with reporting progress and compliance within 30 days, adhering to all Code provisions.

Conclusion:
The Petition/Application was admitted, initiating the Corporate Insolvency Resolution Process effective immediately. The IRP's responsibilities, compliance requirements, and progress reporting were outlined, ensuring adherence to the Code's procedures for the resolution of the financial dispute between the Financial Creditor and the Debtor.