Section 7 insolvency application admitted after proof of default and completeness of supporting financial records.

An application under section 7 of the Insolvency and Bankruptcy Code was found complete because it was supported by loan and security documents, account statements, a certificate of charge, bankers' certificates and the proposed interim resolution professional's consent. The objection that the filing was unauthorised was rejected on the basis of the power of attorney and authority letter. Default was established from the restructuring of facilities, subsequent account irregularities, NPA classification and outstanding financial debt. Pendency before the Debt Recovery Tribunal and the borrower's objections did not displace the material showing default, and the statutory requirements for admission were satisfied, so the corporate insolvency resolution process was initiated.

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Issues: Whether the application under section 7 of the Insolvency and Bankruptcy Code, 2016 was complete and whether default in repayment was established so as to admit the corporate insolvency resolution process.

Analysis: The application was supported by the loan and security documents, account statements, certificate of charge, bankers' certificates and the written communication of the proposed interim resolution professional. The objection as to authorisation was rejected on the basis of the power of attorney and authority letter. The record showed restructuring of the facilities, subsequent irregularity in the account, classification of the account as non-performing asset, and outstanding financial debt. The pendency of proceedings before the Debt Recovery Tribunal and the borrower's objections did not dislodge the material showing default. Applying the principle that the adjudicating authority is required to satisfy itself only about the existence of default and the completeness of the application, the statutory requirements for admission were held to be met.

Conclusion: The application was admitted and the corporate insolvency resolution process was initiated.

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