2019 (9) TMI 589 - Tri - Insolvency and Bankruptcy

Maintainability of application - Initiation of CIRP - Section 9 of the Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - corporate debtor not in a position to pay the said outstanding - HELD THAT - On perusal of the material available on record it is also found that, the respondent has not raised any dispute against the claim and has admitted claim of the operational creditor by way of affidavit. This adjudicating authority is of the considered view that operational debt is due to the Applicant. That, service is complete and no dispute has been raised by the respondent. That, Applicant is an Operational Creditor within the meaning of sub-section (5) of Section 20 of the Code. From the aforesaid material on record, petitioner is able to establish that there exists debt as well as occurrence of default. The Application filed by the Applicant is complete in all respects. It is a fit case to initiate Insolvency Resolution Process by admitting the Application under Section 9(5)(1) of the Code - Application admitted - moratorium declared.

Summary

Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 to trigger Insolvency Resolution Process against a corporate debtor.

Analysis:
The operational creditor filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the insolvency resolution process against the corporate debtor. The operational creditor, a private limited company, claimed an amount of ?3,09,55,708.00 as per the deed of assignment with the corporate debtor. The respondent, a textile manufacturing company, acknowledged the debt in its reply to the demand notice. The operational creditor submitted various documents supporting the claim, including demand notice, reply from the corporate debtor, balance confirmation, annual accounts, and a certificate from the creditor's bank.

Upon examination, it was found that the corporate debtor admitted the debt, and no dispute was raised against the claim. The legislation guide on Insolvency Law of United Nations Commission on International Trade Law was referenced to assess the legitimacy of the debt and any possible disputes. The adjudicating authority determined that the operational debt was due to the applicant, who qualified as an operational creditor under the Code. The application was found to be complete, and an interim resolution professional was appointed.

The adjudicating authority declared a moratorium, prohibiting certain actions against the corporate debtor, and directed the Insolvency Resolution Professional to make a public announcement initiating the corporate insolvency resolution process. The order of moratorium was to remain in effect until the completion of the resolution process or liquidation of the corporate debtor. The supply of goods and essential services to the corporate debtor was not to be terminated during the moratorium period, subject to exceptions notified by the Central Government.

In conclusion, the petition was admitted, and the order of moratorium was issued. The communication of the order was to be sent to the relevant parties involved in the proceedings. The petition was disposed of with no order as to costs.