2018 (3) TMI 1819 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process Initiated for Defaulting Company

The Adjudicating Authority admitted the Company Petition for the initiation of Corporate Insolvency Resolution Process under Section 10 of the Insolvency ... Maintainability of petition - initiation of CIRP - Corporate Debtor unable to make repayment - existence of debt and default - HELD THAT:- This Bench is of the view that the corporate debtor has committed default and the petition contains the particulars as required u/S 10 Of the Code. Having satisfied with the Corporate Debtor could not pay/discharge its debt to the abovesaid Financial Creditors and having satisfied with the proposed IRP is also eligible to act as Interim Resolution Professional in the instant case, accordingly, Adjudicating Authority admits the Application for initiation of CIRP under Section 10 of the Code and also imposes the moratorium - petition admitted - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process under Section 10 of Insolvency and Bankruptcy Code 2016.2. Default in payment to Financial Creditors.3. Appointment of Interim Resolution Professional.4. Imposition of moratorium.Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 10 of Insolvency and Bankruptcy Code 2016:The Company Petition was filed by Leo Duct Engineers & Consultants Limited for the initiation of Corporate Insolvency Resolution process under Section 10 of the Insolvency and Bankruptcy Code 2016. The Applicant submitted Form-6 to commence CIRP proceedings, disclosing debts owed to Canara Bank and Standard Chartered Bank. The Adjudicating Authority observed the outstanding debt amount for both Financial Creditors. The Bench found that the corporate debtor had committed a default and fulfilled the requirements under Section 10 of the Code. The application was admitted, and a moratorium was imposed to prohibit suits, asset disposal, and enforce security interests.Issue 2: Default in Payment to Financial Creditors:Details of debts owed to Canara Bank and Standard Chartered Bank were submitted, along with the corporate debtor's financial statements, assets, liabilities, and personal guarantees by Promoters. The corporate debtor's financial position revealed losses and borrowings, leading to the classification of the account as a Non-performing Asset. The Adjudicating Authority determined the default in payment to the Financial Creditors and admitted the petition for CIRP initiation.Issue 3: Appointment of Interim Resolution Professional:The corporate debtor proposed Mr. Martin Sunder Kumar Golla as the Interim Resolution Professional, who consented with no pending disciplinary proceedings against him. The Bench approved the appointment of Mr. Golla as the Interim Resolution Professional to carry out functions under the Insolvency & Bankruptcy Code, ensuring compliance with the Code's requirements and procedures.Issue 4: Imposition of Moratorium:The Adjudicating Authority imposed a moratorium prohibiting suits, asset transfers, security enforcement, and property recovery against the corporate debtor. Essential goods or services supply was not to be terminated during the moratorium period. The order of moratorium was effective from a specified date until the completion of the insolvency resolution process or liquidation approval. Additionally, the public announcement of the insolvency resolution process was mandated to be made promptly.This detailed analysis of the judgment outlines the key issues addressed by the Tribunal regarding the initiation of Corporate Insolvency Resolution Process, default in payment to Financial Creditors, appointment of an Interim Resolution Professional, and the imposition of a moratorium to facilitate the resolution process effectively.