2019 (3) TMI 1337 - AT - Insolvency and Bankruptcy

Corporate insolvency process - application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - There being a debt and default and the application being complete, the Adjudicating Authority admitted the application under Section 7. The Appellant submits that the Corporate Debtor is a solvent Company and amount is lying in the Escrow Account and they intend to settle the claim. The Corporate Debtor wanted six months time to settle the matter but such time was not granted. Such ground cannot be taken into consideration to set aside the impugned order of admission dated 14th December, 2018. We make it clear that this order will not come in the way of the Appellants or Shareholders of the Corporate Debtor to settle the claim of the creditors and take advantage of Section 12 A of the I&B Code , to which, no objection raised by the 1st and 2nd Respondents.

Summary

Issues:
Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 by the Adjudicating Authority.

Analysis:
The appeal was filed by the shareholders of a company against the order passed by the Adjudicating Authority admitting an application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority admitted the application based on the presence of debt and default, considering the application to be complete.

The shareholders of the company argued that the company is solvent, with funds in an Escrow Account, and they intended to settle the claim. They requested six months to settle the matter, which was not granted. However, the Tribunal held that the ground for settlement cannot be used to set aside the order of admission.

The Tribunal clarified that the order would not prevent the shareholders from settling the claim of the creditors and utilizing Section 12A of the Insolvency and Bankruptcy Code. The Respondents did not object to this provision. Consequently, the appeal was disposed of with the above observations.