2022 (5) TMI 870 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - From the contents of the counter it is clear that there is an admission of debt and also the default. The reasons put forth for not being able to discharge the debt, unfortunately cannot be considered within the frame work of IBC. What Section 9 requires is only default on the part of the Corporate Debtor, for initiating CIRP. At the hearing, no argument was made against the default in discharging the debt. Hence, since there is acknowledgement of debt in clear terms and also default, there need not be any further discussion and demur to allow the Application. Petition admitted - moratorium declared.

Summary

Issues:
Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.

Analysis:
The Company Petition was filed by a Financial Creditor seeking to commence the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, who had failed to meet repayment obligations despite acquiring loans and security interests. The Financial Creditor acquired loans from various lenders and sought initiation of CIRP due to the Corporate Debtor's default.

The Corporate Debtor responded by outlining operational challenges faced, including the need for additional working capital to operate at full capacity. However, the Tribunal noted that the reasons provided did not absolve the Corporate Debtor from defaulting on its debt obligations. The Tribunal emphasized that under Section 9 of the Insolvency and Bankruptcy Code (IBC), only default by the Corporate Debtor is required to initiate CIRP.

The Corporate Debtor's admission of debt and default were clear from their counter, leading the Tribunal to admit the Company Petition. The Financial Creditor's proposed Insolvency Resolution Professional (IRP) was approved, and the IRP was directed to take charge of the Corporate Debtor's management immediately.

The Tribunal ordered the commencement of the Corporate Insolvency Resolution Process, appointing the approved IRP to oversee the process. A moratorium was declared in respect of the Corporate Debtor, and all associated parties were instructed to cooperate with the IRP. The Registry was tasked with communicating the order to the relevant parties for compliance.

In conclusion, the Company Petition was admitted, and the Corporate Insolvency Resolution Process was set to begin, with the appointed IRP taking charge of managing the affairs of the Corporate Debtor to facilitate the resolution process effectively.