2017 (7) TMI 697 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - solvency and Bankruptcy Code, 2016 - Held that - Financial Creditor has placed on record all the documents concerning the default and the name of resolution professional proposed to act as an interim resolution professional. We are satisfied that the default has occurred and the application in all other respects is complete. Moreover, there is no opposition despite the fact that the service has been effected. Therefore, we are inclined to admit this petition. This petition is admitted. The necessary consequence of admission is that a declaration is made in terms of Section 13(a) for the purpose of section 14 of the Code. A direction is issued to the interim resolution professional Shri Sanjay Kumar Agarwal to make public announcement in accordance with the provisions of Section 13(1)(b) of the Code. The corollary of the declaration is that moratorium under Section 14 of the Code shall come in operation from the date of this order.

Issues:
1. Application filed under section 7 of the Insolvency and Bankruptcy Code, 2016 by a Non-Banking Financial Company against a Corporate Debtor.
2. Default by the Corporate Debtor in repaying a loan along with interest.
3. Legal notices served for repayment and winding up of the Corporate Debtor.
4. Verification and filing of the petition by a Director of the Financial Creditor.
5. Appointment of an Insolvency Professional for the proposed corporate insolvency resolution process.
6. Completion of service to the Corporate Debtor without any opposition.
7. Admission of the petition and issuance of necessary directions.

Analysis:
1. The application was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 by a Non-Banking Financial Company against a Corporate Debtor, seeking to initiate the Corporate Insolvency Resolution Process. The Financial Creditor, a registered NBFC, provided financial assistance to the Corporate Debtor through an Inter Corporate Deposit Agreement, which the Corporate Debtor failed to repay as per the agreed terms, leading to the default situation.

2. The Corporate Debtor availed a loan from the Financial Creditor, which it failed to repay along with the accrued interest despite legal notices demanding the repayment. The Financial Creditor provided evidence of the default, including the outstanding amount and the failure of the Corporate Debtor to make any payments as per the agreement terms.

3. Legal notices were served on the Corporate Debtor for repayment of the loan amount and a subsequent notice for winding up of the company due to non-payment. Despite these notices, the Corporate Debtor did not make any payments, leading to the initiation of the insolvency resolution process by the Financial Creditor.

4. The petition was duly verified, signed, and filed by a Director of the Financial Creditor, supported by a Board resolution authorizing the filing. This ensured the legal validity and authenticity of the petition before the Tribunal.

5. An Insolvency Professional was appointed by the Financial Creditor for the proposed corporate insolvency resolution process. The professional provided necessary disclosures and affirmed compliance with the regulations governing insolvency professionals, ensuring transparency and adherence to the legal framework.

6. Service of the petition and related documents to the Corporate Debtor was completed without any opposition from the respondent. Despite the service being effected, no representation was made on behalf of the Corporate Debtor to contest the claims made by the Financial Creditor, indicating a lack of opposition to the petition.

7. After hearing the counsel for the Financial Creditor and examining the records, the Tribunal found merit in the application, admitted the petition, and issued necessary directions for the initiation of the insolvency resolution process. The declaration of admission triggered the moratorium under Section 14 of the Code, imposing restrictions on legal actions against the Corporate Debtor and asset transfers, ensuring the orderly resolution of the insolvency proceedings.

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