2021 (1) TMI 933 - Tri - Insolvency and Bankruptcy

Permission for withdrawal of petition - Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - Since the Company Petition is not yet admitted, and the Petitioner has itself filed the above joint memo praying for withdrawal of the the instant Company Petition, we are inclined to permit the Petitioner to withdraw the instant Company Petition. Petition is hereby disposed of as withdrawn by granting liberty to the Petitioner to file a fresh petition in case of non-adherence to the agreed terms of payment by the Corporate Debtor.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process under IBC, 2016 for default in payment.

Analysis:
The judgment pertains to a case where a petition was filed seeking to initiate the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC) due to a default committed by the Corporate Debtor. The Petitioner, an Operational Creditor, claimed an amount of USD 97,698.90, including interest at the rate of 12% per annum. The case witnessed multiple adjournments at the request of parties before the final hearing.

The parties reached a settlement wherein the Corporate Debtor agreed to pay the Operational Creditor a total amount of USD 97,698, with an upfront payment of USD 4,429 and the remaining amount in fifteen installments spread over eight months. In case of default in payments, the Corporate Debtor was granted an 8-day remedy period to make the payment. Additionally, the Corporate Debtor provided security cheques to ensure payment compliance, which were to be held by an Escrow Agent.

The settlement terms included the provision for the Operational Creditor to deposit the security cheques if the Corporate Debtor defaulted on payments after the remedy period. The judgment highlighted the detailed schedule of payment dates and amounts, emphasizing the mutual agreement for a full and final settlement between the parties.

As the Company Petition was not admitted and the Petitioner filed a joint memo for withdrawal, the Tribunal permitted the withdrawal of the petition. The judgment disposed of the petition with liberty granted to the Petitioner to file a fresh petition if the Corporate Debtor failed to adhere to the agreed terms of payment, without imposing any costs.

In conclusion, the judgment showcases the importance of settlement agreements in insolvency proceedings, highlighting the significance of mutual understanding and adherence to agreed terms to avoid the initiation of CIRP under the IBC, 2016.