Proof of financial default supported section 7 admission and triggered insolvency resolution process and moratorium

Balance sheets for multiple years, supported by account statements, were treated as evidence of an outstanding liability, while the defence of repayment was rejected for lack of documentary proof. On that basis, the statutory requirements for admission of a financial creditor's section 7 application were found satisfied. The proposed insolvency resolution professional was held eligible for appointment, and consequential directions followed for declaration of moratorium and commencement of the corporate insolvency resolution process.

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Issues: Whether the financial creditor established default by the corporate debtor so as to warrant admission of the section 7 application and commencement of the corporate insolvency resolution process.

Analysis: The balance sheets placed on record for multiple years, supported by the account statements, were accepted as showing an outstanding liability towards the corporate debtor. The defence of repayment was found unsupported by documentary proof and was rejected as unsubstantiated. On that basis, the statutory requirements for admission of a financial creditor's application under section 7 were held to be satisfied, and the proposed insolvency resolution professional was found eligible for appointment. Consequential directions were issued for declaration of moratorium and commencement of the insolvency resolution process.

Conclusion: The application was admitted, the corporate insolvency resolution process was initiated, moratorium was declared, and the proposed insolvency resolution professional was appointed.

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