2020 (10) TMI 381 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - This Adjudicating Authority, on perusal of the documents filed by the Financial Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore the Application under sub-section (2) of Section 7 is taken as complete, accordingly this Bench hereby admits this Petition. Application admitted - moratorium declared.

Summary

Issues:
1. Corporate Insolvency Resolution Process sought against a Corporate Debtor for default.
2. Details of facilities granted by the Petitioner to the Corporate Debtor.
3. Documents submitted by the Petitioner in support of the facilities.
4. Default amount and evidence provided by the Petitioner.
5. Declaration of the Corporate Debtor's account as NPA and subsequent actions.
6. Submissions by the Corporate Debtor in response to the petition.
7. Application of legal precedents and decision for admission of the petition.
8. Decision and orders by the Adjudicating Authority.

Analysis:
1. The Punjab National Bank filed for Corporate Insolvency Resolution Process against a Corporate Debtor due to a default amounting to ?22,13,87,073 under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Petitioner provided details of seven facilities granted to the Corporate Debtor, including term loans, cash credit, and overdraft, with corresponding amounts and dates of sanction.

2. The Petitioner submitted various documents supporting the facilities granted, such as loan agreements, letters of intent, continuity, and undertakings. Additionally, a statement of account and a Commercial Credit Information Report were enclosed to demonstrate the default amount due from the Corporate Debtor.

3. The Corporate Debtor's account was classified as a non-performing asset in 2014, and subsequent actions were taken by the Petitioner, including issuing notices under the SARFAESI Act. The Corporate Debtor responded by citing reasons for the default, including financial challenges due to mismatched income and increased interest rates, as well as market slowdown affecting rental income.

4. Despite the Corporate Debtor's submissions, the Adjudicating Authority referred to a Supreme Court ruling emphasizing the criteria for admitting such petitions. The Authority found the default valid and appointed an Interim Resolution Professional, Mr. Udaykumar Bhaskar Bhat, to oversee the insolvency resolution process.

5. The Adjudicating Authority issued orders prohibiting certain actions against the Corporate Debtor, declaring a moratorium period, and specifying the commencement of the insolvency resolution process. The decision was communicated to both parties and the appointed Interim Resolution Professional promptly.

By following the legal procedures and precedents, the Adjudicating Authority admitted the petition for Corporate Insolvency Resolution Process against the Corporate Debtor, ensuring compliance with the Insolvency and Bankruptcy Code provisions and appointing necessary professionals for the resolution process.