2021 (3) TMI 66 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - corporate debtor unable to liquidate their claim - applicant is Corporate Debtor - existence of debt - HELD THAT - Notice was issued to the corporate debtor vide order dated February 28, 2020 of the Adjudicating Authority and the reply was filed by the corporate debtor as on March 16, 2020. The corporate debtor submitted that at the time of availing the services from the operational creditor, the corporate debtor had full intentions to pay for the services availed by it, however due to bad shape of economy and demonetization the business of the corporate debtor had suffered huge losses, therefore the corporate debtor was unable to pay the said amount. The order was reserved on November 26, 2020 learned counsel for the corporate debtor submitted that the corporate debtor has admitted its liability and inability to pay the amount hence, it clearly establishes the existence of debt. In the above circumstances this Tribunal initiates CIRP of the respondent-company.

Issues:
1. Application filed under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of corporate insolvency process.
2. Claim of operational debt by the applicant against the corporate debtor.
3. Submission of demand notice under section 8 of the Insolvency and Bankruptcy Code, 2016.
4. Response of the corporate debtor regarding its inability to pay the operational debt.
5. Admission of liability by the corporate debtor.
6. Imposition of moratorium under section 14 of the Code.
7. Appointment of interim resolution professional (IRP) and deposit requirement by the applicant.

Analysis:
1. The application was filed under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the corporate insolvency process against the respondent, a company engaged in business activities. The applicant, claiming to be the operational creditor, sought to recover an unpaid operational debt of ?8,43,700 from the corporate debtor.

2. The operational creditor had rendered office management services to the corporate debtor, for which an invoice was issued. Despite sending a demand notice under section 8 of the Code, the operational creditor did not receive payment or any notice of dispute from the corporate debtor, leading to the filing of the petition for insolvency resolution.

3. In response, the corporate debtor cited economic challenges, including losses due to the state of the economy and demonetization, as reasons for its inability to pay the debt. However, it admitted its liability and inability to settle the outstanding amount, establishing the existence of the debt.

4. Consequently, the Tribunal acknowledged the admission of liability by the corporate debtor and initiated the Corporate Insolvency Resolution Process (CIRP) against the company. A moratorium was imposed under section 14 of the Code, prohibiting various actions against the respondent, ensuring the protection of its assets during the resolution process.

5. The Tribunal appointed an interim resolution professional (IRP) to oversee the resolution process, requiring the applicant to deposit a sum to cover immediate expenses. The IRP was directed to comply with statutory provisions and submit a report within 30 days. The order was communicated to all relevant parties and authorities for further action and compliance.

By analyzing the issues involved and the Tribunal's decision, it is evident that the judgment addressed the application for insolvency resolution, the claim of operational debt, the response of the corporate debtor, the admission of liability, the imposition of a moratorium, and the appointment of an IRP, ensuring a structured process for resolving the financial distress of the corporate debtor.

← Previous Next →