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2021 (3) TMI 98 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - existence of debt and dispute or not - HELD THAT - As regards the amount involved in the Default and the Date of default, it is mentioned by the Financial Creditor in the Part IV of their Petition that the total claim amount is ₹ 7,77,60,913 only. It is further added by the Financial Creditor that the account of the Corporate Debtor was classified as NPA on 28-9-2016 - That during the course of the hearings on 27-8-2019 as well as 9-10-2020, the Corporate Debtor had unequivocally admitted its liability. The Financial Creditor has been successful in establishing the 'default' of the amount above ₹ 1,00,00,000 in respect of the Corporate Debtor. This Bench is, therefore, inclined to initiate CIR process against the Corporate Debtor - the present Petition being complete and having established the default in payment of the Financial Debt for the default amount being above ₹ 1,00,00,000, the Petition is admitted in terms of section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. Petition admitted.
Issues:
1. Initiation of Corporate Insolvency Resolution process under section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Default in payment by the Corporate Debtor. 3. Appointment of an Interim Resolution Professional. 4. Declaration of moratorium under Section 14 of the Code. 5. Imposition of prohibitions during the moratorium period. Analysis: 1. The Financial Creditor filed a petition under section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution process against the Corporate Debtor. The Financial Creditor, M/s Alchemist Asset Reconstruction Company Limited, claimed that the Corporate Debtor, M/s Associated Lighting Systems Private Limited, defaulted on a total claim amount of ?7,77,60,913, with the account being classified as a Non-Performing Asset on 28-9-2016. 2. The Financial Creditor provided details of credit facilities granted to the Corporate Debtor over the years, totaling ?500 Lakhs in 2011, ?500 Lakhs in 2012, and ?610.03 Lakhs in 2016. Various documents, including the Hypothecation Agreement and recall notice, were annexed as proof of the financial debt. The Corporate Debtor admitted its liability during the hearings, leading to the establishment of the default amounting to over ?1,00,00,000. 3. The Tribunal admitted the petition, citing the established default in payment and the completion of the petition. Consequently, a moratorium was declared under Section 14 of the Code. An Interim Resolution Professional, Mr. Devendra Singh, was appointed to oversee the resolution process, subject to certain conditions, and directed to comply with the provisions of the Insolvency and Bankruptcy Code, 2016. 4. The moratorium imposed various prohibitions, including the institution of suits against the Corporate Debtor, transfer of assets, enforcement of security interests, and recovery of property by owners or lessors. The Financial Creditor was instructed to deposit ?2,00,000 with the Interim Resolution Professional to cover immediate expenses, subject to adjustment by the Committee of Creditors. 5. The Tribunal communicated the order to the parties involved and the Insolvency and Bankruptcy Board of India (IBBI) for record-keeping. The moratorium came into effect immediately upon the admission of the petition, signaling the commencement of the Corporate Insolvency Resolution process for the Corporate Debtor.
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