Court admits CIRP application, appoints IRP, and declares moratorium under Insolvency and Bankruptcy Code

The application to initiate Corporate Insolvency Resolution Process (CIRP) against a corporate debtor was admitted under Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016. The court appointed an Interim Resolution Professional (IRP) and declared a moratorium under Section 13(1)(a) of the Code. The pending winding-up petition did not prevent the initiation of CIRP, and the security documents and guarantees were not invoked by the financial creditors. The application was disposed of with communication to the relevant parties and the appointed IRP.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016.
2. Default and outstanding debt details.
3. Security documents and guarantees executed.
4. Pending winding up petition and its impact on CIRP.
5. Appointment of Interim Resolution Professional (IRP).
6. Declaration of moratorium under Section 13(1)(a) of the Code.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
ICICI Bank Ltd., as the financial creditor, filed an application to initiate CIRP against ABG Shipyard Ltd., the corporate debtor, under Section 9 of the Insolvency and Bankruptcy Code, 2016. The application was submitted through the General Power of Attorney holder Bhairavi Deshpande and was supported by Rule 4 and 9 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

2. Default and Outstanding Debt Details:
The corporate debtor had availed several loan facilities from the financial creditors under various agreements, including the Master Restructuring Agreement (MRA) and its amendments. The corporate debtor defaulted on multiple facilities, with the total amount of default as of June 21, 2017, being Rs. 4291.90 crores. The defaults included term loans, priority loans, FITL facilities, and restructured working capital facilities, among others. The date of default for all mentioned facilities was October 20, 2016.

3. Security Documents and Guarantees Executed:
The corporate debtor executed several guarantee deeds and letters of comfort in favor of the financial creditor for various facilities granted to its group companies. These included guarantee deeds dated June 27, 2012, June 28, 2011, and April 13, 2012, and letters of comfort dated April 18, 2011, and August 31, 2010. However, these guarantees and letters of comfort were not invoked by the financial creditors.

4. Pending Winding Up Petition and Its Impact on CIRP:
A winding-up petition (Company Petition No. 375 of 2016) was filed against the corporate debtor and admitted by the Hon'ble High Court of Gujarat on June 19, 2017. Despite the admission, no winding-up order or appointment of a provisional liquidator was made. The adjudicating authority concluded that Section 446 of the Companies Act, 1956, was not applicable, and Section 238 of the Insolvency and Bankruptcy Code, 2016, provided overriding effect over any inconsistent law. Therefore, the pendency of the winding-up petition did not bar the initiation of CIRP.

5. Appointment of Interim Resolution Professional (IRP):
The financial creditor proposed Mr. Sundaresh Bhatt as the Interim Resolution Professional (IRP), and his written communication in Form No. 2 confirmed no pending disciplinary proceedings against him. The adjudicating authority appointed Mr. Sundaresh Bhatt as the IRP and directed the applicant to make a public announcement about the initiation of CIRP as required by Section 13(1)(b) of the Code.

6. Declaration of Moratorium:
The adjudicating authority declared a moratorium under Section 13(1)(a) of the Code, prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of assets, foreclosure or enforcement of security interests, and recovery of property by owners or lessors. The moratorium order would remain in force until the completion of the Corporate Insolvency Resolution Process, subject to the provisions of sub-section (4) of Section 14.

Conclusion:
The application to initiate CIRP was admitted under Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016. The adjudicating authority appointed Mr. Sundaresh Bhatt as the IRP and declared a moratorium, thereby prohibiting various actions against the corporate debtor. The application was disposed of accordingly, and copies of the order were communicated to the applicant, respondent, and the IRP.

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