2019 (3) TMI 1519 - Tri - Insolvency and Bankruptcy

Initiating Corporate Insolvency Resolution Process - default in repaying the loan availed by the corporate debtor - default in repayment of the monthly instalment due and payable by the Corporate Debtor to the Financial Creditor - HELD THAT - The existence of default stand proved in this case. So also financial creditor produced Form-2 along with the written communication to prove that no disciplinary proceeding is pending against the proposed Interim Resolution Professional. The corporate debtor in the instant case did not turn up to contest the petition. The applicant has produced all the required documents. The existence of default also stands proved. The applicant herein, in this case, succeeds in proving that it has complied with all the requirements to be meted out under Section 7(3) of the I & B Code, 2016. Therefore, the application is liable to be admitted. Accordingly, this application is admitted .application filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, Downtown Temptations Private Limited is hereby admitted.

Summary

Issues: Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process due to default in loan repayment.

Detailed Analysis:

1. Default in Loan Repayment: The application was filed by the financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the corporate debtor for defaulting on a loan of ?3,62,66,349. The corporate debtor failed to repay the principal amount along with interest, breaching the Loan Agreement by missing monthly instalment payments.

2. Evidence of Default: The Financial Creditor produced various documents to prove the default, including a Statement of Account, foreclosure statement, computation of default days, Certificate of registration of Charge, Loan Agreement, and a credit information company report. These documents substantiated the default by the corporate debtor.

3. Procedural Compliance: The applicant fulfilled all requirements under Section 7(3) of the I & B Code, 2016. The applicant provided evidence of default, including the QBL report, and ensured no disciplinary proceedings were pending against the proposed Interim Resolution Professional.

4. Admission of Application: The corporate debtor did not contest the petition, and the applicant successfully proved the existence of default. As a result, the Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process against the corporate debtor.

5. Orders: The Tribunal issued various orders upon admitting the application, including declaring a moratorium, appointing an Interim Resolution Professional, and directing the convening of a meeting of the Committee of Creditors. The moratorium prohibited certain actions against the corporate debtor and ensured the continuation of essential goods or services supply.

6. Resolution Process: The Interim Resolution Professional was tasked with identifying creditors, constituting the Committee of Creditors, and submitting a resolution plan within a specified timeframe. The order of moratorium would remain in effect until the completion of the corporate insolvency resolution process, subject to approval of a resolution plan or liquidation order.

7. Communication and Progress Report: The registry was directed to communicate the order to the Financial Creditor, Corporate Debtor, and the Interim Resolution Professional. A progress report filing was scheduled for a future date to monitor the resolution process.

This detailed analysis outlines the legal judgment's key aspects, including default in loan repayment, evidence presented, procedural compliance, admission of the application, orders issued, resolution process requirements, and communication directives for the parties involved.