Tribunal rules in favor of Applicant in loan default case under Insolvency and Bankruptcy Code

The Tribunal found in favor of the Applicant in an Insolvency and Bankruptcy Code application for default in loan repayment by the Corporate Debtor. Despite the Respondent's claims of partial repayment and solvency, the Tribunal determined the loan as due and payable due to lack of repayment and unsubstantiated compromise agreement. An interim resolution professional (IRP) was appointed, initiating the corporate insolvency resolution process under Section 7 of the Code. A moratorium was imposed on the Corporate Debtor, suspending legal actions, and operational directions were issued for communication and compliance.

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Issues:
Application under Insolvency and Bankruptcy Code, 2016 for default in repayment of loan by Corporate Debtor.

Analysis:
1. Default in Repayment: The Applicant claimed to be the Financial Creditor of the Respondent Company, stating that a loan was disbursed but not repaid within the agreed timeframe. The interest payable on the loan was also mentioned, along with the date of disbursement and default. The Corporate Debtor failed to repay the loan despite a notice from the Applicant.

2. Response of Respondent: The Respondent contended that there was an agreement to repay the amount in installments until a certain date. It was claimed that some amount had already been transferred to the Financial Creditor. The Respondent asserted its solvency and ability to clear debts.

3. Judicial Review: The Tribunal reviewed the Application, responses, and evidence provided. It noted the undisputed loan disbursement by the Applicant and the partial repayment claimed by the Respondent. The Tribunal found the Respondent's submission on a compromise agreement to be unsubstantiated as no executed agreement was presented.

4. Adjudication and Resolution: The Tribunal concluded that the loan was due and payable, considering the lack of repayment and evasive response from the Corporate Debtor. It invoked the provisions of the Insolvency and Bankruptcy Code, appointing an interim resolution professional (IRP) for further proceedings.

5. Appointment of IRP: The named IRP consented to the appointment and met the eligibility criteria. The Tribunal found the case suitable for admission under Section 7 of the Code, initiating the corporate insolvency resolution process against the Corporate Debtor.

6. Moratorium and Suspension: The Tribunal imposed a moratorium on the Corporate Debtor as per Section 14 of the Code, suspending legal actions against the company. The Board of Directors was suspended, and the duration of the moratorium was specified until the completion of the insolvency resolution process.

7. Operational Directions: The Tribunal directed the registry to communicate the order to the parties involved promptly. The IRP was to be provided with a copy of the order, and the IBBI was to receive a record copy. The application was disposed of with these directions in place.

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