2022 (5) TMI 1206 - 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 evidence placed by the financial creditor is sufficient to ascertain the existence of a default on the part of the Corporate Debtor as the Corporate Debtor has failed to honour the terms of the agreement, further, the Cheque provided by the corporate debtor towards principal amount also bounced. The Financial Creditor has fulfilled all the requirements of law. Accordingly, this Adjudicating Authority is inclined to admit this application and initiate the process of CIRP of the Corporate Debtor. The financial Creditor has also proposed the name of the Resolution Professional for appointment of IRP. Application admitted - moratorium declared.

Summary

Issues:
Application under section 7 of IBC for initiating CIRP against Corporate Debtor.

Analysis:
The Financial Creditor filed an application under section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor, citing default on a corporate loan provided to the Corporate Debtor. The loan agreement was executed in October 2015 for Rs. 1,00,00,000 with an interest rate of 15% per annum, secured by the assets of the company and personal guarantees of directors. Despite initial payments, the Corporate Debtor defaulted on interest payments post-March 2018, leading to legal action by the Financial Creditor. The Corporate Debtor issued a bounced cheque for the outstanding amount, prompting the Financial Creditor to demand Rs. 1,52,50,000 through a legal notice.

Ex-Parte Order:
The Corporate Debtor failed to respond to the proceedings despite multiple opportunities, resulting in an ex-parte order against them. The Adjudicating Authority found the evidence presented by the Financial Creditor sufficient to establish default on the part of the Corporate Debtor. The bounced cheque further solidified the claim of default, leading to the decision to admit the application and initiate the Corporate Insolvency Resolution Process (CIRP).

Appointment of IRP and Moratorium:
The Adjudicating Authority appointed an Insolvency Resolution Professional (IRP) proposed by the Financial Creditor to manage the Corporate Debtor's affairs. A moratorium was declared from the date of the order until the completion of the CIRP, prohibiting legal actions against the Corporate Debtor, asset transfers, enforcement of security interests, and termination of essential services. The IRP was directed to comply with specific sections of the Insolvency and Bankruptcy Code and receive cooperation from the Corporate Debtor's management.

Compliance and Communication:
The Financial Creditor was instructed to send a copy of the order to the IRP promptly for compliance. Additionally, the Financial Creditor was directed to communicate the order to both the IRP and the Corporate Debtor without delay. The Registry was tasked with informing the Registrar of Companies to update the Corporate Debtor's status for public information. The order was pronounced through a virtual hearing for efficiency and convenience.