2021 (5) TMI 179 - 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 - On perusal of documents placed before this Adjudicating Authority, the Financial Creditor has proved existence of 'debt' and 'default' and there being no denial from the Corporate Debtor with respect to outstanding due. Application admitted - proposed Interim Resolution Professional appointed - moratorium declared.

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code for initiation of Corporate Insolvency Resolution Process.
2. Default in repayment of financial debt by the Corporate Debtor.
3. Substantiation of claim by the Financial Creditor.
4. Response of the Corporate Debtor regarding the debt and default.
5. Appointment of Interim Resolution Professional and declaration of moratorium.
6. Direction for public announcement and compliance with the Insolvency and Bankruptcy Code.

Analysis:
1. The judgment deals with an application filed under Section 7 of the Insolvency and Bankruptcy Code for initiating Corporate Insolvency Resolution Process due to the default in repaying a financial debt by the Corporate Debtor. The Financial Creditor provided details of the debt, including a loan agreement and ledger statements, establishing the existence of the debt and default.

2. The Corporate Debtor, in response, did not dispute the business transaction but cited losses due to the COVID-19 pandemic as the reason for non-payment. However, the Adjudicating Authority found that the Financial Creditor had proven the debt and default, leading to the admission of the application for CIRP.

3. Following the admission, the judgment appoints an Interim Resolution Professional and declares a moratorium as per the provisions of the Insolvency and Bankruptcy Code. The moratorium prohibits legal actions against the Corporate Debtor, asset transfers, and enforces the continuity of essential supplies or services during the resolution process.

4. The judgment also directs the IRP to make a public announcement, ensures compliance with the Code, and communicates the orders to relevant parties. The appointment of the IRP and the detailed instructions regarding the moratorium and compliance highlight the procedural aspects of insolvency resolution under the Code.

5. Overall, the judgment reflects a thorough analysis of the debt default situation, the response of the Corporate Debtor, and the necessary steps to be taken in the insolvency resolution process, emphasizing the importance of adherence to the legal framework and procedural requirements outlined in the Insolvency and Bankruptcy Code.