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2020 (11) TMI 158 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - As per Section 7 of IBC, in an application preferred by the Financial Creditor for initiation of Corporate Insolvency Resolution Process, the Adjudicating Authority is required to see the existence of financial debt and ascertain the existence of default. As per the documents submitted by the Petitioner that there is a financial debt in the form of loans availed by the Corporate Debtor. The date of default is on 26.10.2015. The last date of transaction from the statement of accounts furnished is on 22.06.2017. The application is filed on 12.04.2018, hence the application is filed well within the period of limitation. From the documents placed on record, this Adjudicating Authority is satisfied that default has been committed by the Corporate Debtor in repayment of loan amount to the Bank. The petition is complete - Petition admitted - moratorium declared.
Issues:
Initiation of corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Respondent company. Detailed Analysis: 1. Background and Petition Filing: The Petitioner, a Deputy General Manager of Indian Overseas Bank, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Respondent company, AMW Motors Limited, for initiating the corporate insolvency resolution process. The Respondent company is engaged in manufacturing and sale of automobile components and had a total debt of over ?515 crores as of October 2015. 2. Debt and Default Details: The debt sanctioned by the Petitioner bank to the Respondent amounted to ?401 crores in the form of term loans and cash credit. The default amount as of October 2015 was over ?515 crores. The Petitioner secured the credit facilities with an equitable mortgage of immovable property and hypothecation of movable and current assets of the Corporate Debtor. 3. Respondent's Defense and Settlement Attempts: The Respondent claimed to be facing liquidity constraints due to industry slowdown and had proposed a one-time settlement scheme approved by the Joint Lenders Forum. However, due to global disruptions caused by COVID-19, an agreement with Weichai Group of China was suspended, affecting the Respondent's ability to meet the settlement timelines. 4. Judgment and Adjudication: The Adjudicating Authority found that the Petitioner had met the requirements of Section 7 of the IBC, establishing the existence of financial debt and default by the Corporate Debtor. The petition was admitted, and a moratorium was declared under Section 14(1) of the IBC, prohibiting certain actions against the Corporate Debtor. 5. Appointment of Interim Insolvency Resolution Professional: The Authority appointed Mr. Avil Menezes as the Interim Insolvency Resolution Professional to oversee the resolution process. The moratorium would be in effect until the completion of the Corporate Insolvency Resolution Process or until a resolution plan is approved or liquidation is ordered. 6. Conclusion: The petition was disposed of with no order as to costs, and the order was communicated to the Petitioner, Respondent, and the appointed Interim Insolvency Resolution Professional for further action in the corporate insolvency resolution process.
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