2021 (4) TMI 48 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - The Debt and Default in question are not disputed by the Respondent. The instant Petition is filed strictly in accordance with the extant provisions of the Code, and also suggested a qualified Resolution Professional namely Shri Kondishetty Kumar Dushyantha - the Instant Company Petition is fit case to admit by initiating CIRP by appointing IRP, and declaring moratorium etc., in respect of the Corporate Debtor. Application admitted - moratorium declared.

Summary

Issues Involved:
- Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC, 2016 based on default committed by the Corporate Debtor.
- Dispute regarding the financial position and ability of the Corporate Debtor to honor its financial commitments.
- Appointment of a qualified Resolution Professional and declaration of moratorium.

Initiation of CIRP based on Default:
The case involved C.P.(IB) No. 35/BB/2021 filed by a Co-operative Bank seeking to initiate CIRP against a Corporate Debtor for defaulting on a total amount of ?49,90,10,000. The Petitioner alleged default by the Corporate Debtor in repayment of a cash credit facility, leading to the initiation of the insolvency resolution process.

Dispute over Financial Position of Corporate Debtor:
The Respondent, in its objections, acknowledged the default but raised concerns about its financial position. It stated that while assets exceeded liabilities, the absence of liquid assets hindered debt repayment. The Corporate Debtor claimed cash-flow insolvency, expressing inability to ascertain the worthiness of receivables for debt repayment.

Appointment of Resolution Professional and Moratorium Declaration:
The Petitioner proposed a qualified Resolution Professional for the case, who had no pending disciplinary proceedings. The Tribunal admitted the Petition, appointing the proposed Resolution Professional and declaring a moratorium. The moratorium prohibited various actions against the Corporate Debtor and directed full cooperation from its Board of Directors and staff.

Additional Petition and Tribunal's Decision:
Another Petition was filed by a different entity against the same Corporate Debtor for a separate default amount. The Tribunal, considering the facts and provisions of the IBC, 2016, admitted the Petition, initiating CIRP for the Corporate Debtor. It appointed the Resolution Professional, declared a moratorium, and directed compliance with the IBC provisions.

Conclusion:
The judgment highlighted the legal process of initiating CIRP based on default, addressing disputes over the Corporate Debtor's financial position, appointing a qualified Resolution Professional, and declaring a moratorium to facilitate the insolvency resolution process. The Tribunal's decision was based on the facts presented and the applicable provisions of the Insolvency and Bankruptcy Code, 2016.