Company Application Admitted for Insolvency Proceedings: Debt Default Case

The National Company Law Tribunal, Chennai Bench, admitted a Company Application under Section 7 of the Insolvency & Bankruptcy Code, 2016, filed by a Financial Creditor against a Corporate Debtor for defaulting on a loan repayment. The Tribunal found the application admissible, confirmed the existence of debt and default, appointed an Interim Resolution Professional, declared a moratorium, and directed a public announcement of the corporate insolvency resolution process.

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Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Existence of debt and default.
3. Appointment of Interim Resolution Professional.
4. Declaration of Moratorium.
5. Direction for public announcement of the corporate insolvency resolution process.

Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016:
The Tribunal received a Company Application under Section 7 of the Insolvency & Bankruptcy Code, 2016, filed by the Financial Creditor, seeking to initiate Corporate Insolvency Resolution Process against the Corporate Debtor due to default in repaying a loan amount. The Corporate Debtor had defaulted in repaying a loan availed by the Principal borrower, and the corporate guarantee had been invoked against the Corporate Debtor. The Tribunal found the application admissible as the Corporate Debtor fell within the definition under Section 5(8) of the Code, allowing the financial creditor to proceed against the Corporate Debtor.

Issue 2: Existence of debt and default:
Upon examining the material papers provided by the Financial Creditor, the Tribunal was satisfied that the debt and default existed. The Corporate Debtor did not raise any objections to the initiation of Corporate Insolvency Resolution Process against them. Consequently, the Tribunal admitted the Company Application and appointed an Insolvency Resolution Professional to manage the resolution process.

Issue 3: Appointment of Interim Resolution Professional:
The Tribunal appointed Mr. Ramakrishnan Sadasivan as the Interim Resolution Professional to oversee the functions as mentioned in the Insolvency & Bankruptcy Code. The appointment was made based on the consent letter given by the Insolvency Resolution Professional and in compliance with the IBBI Regulations/Circulars/Directions regarding the fee payable to the IRP/RP.

Issue 4: Declaration of Moratorium:
The Tribunal declared a moratorium, prohibiting various actions such as instituting suits, transferring assets, foreclosing security interests, and recovering property against the Corporate Debtor. Essential goods or services supplied to the Corporate Debtor were not to be terminated during the moratorium period. The order of moratorium was to be effective until the completion of the corporate insolvency resolution process, approval of a resolution plan, or liquidation of the debtor.

Issue 5: Direction for public announcement of the corporate insolvency resolution process:
The Tribunal directed the immediate public announcement of the corporate insolvency resolution process as specified under the Insolvency & Bankruptcy Code. The Registry was instructed to communicate the order to the Financial Creditor, Corporate Debtor, and the appointed Interim Resolution Professional promptly via email or WhatsApp.

This judgment from the National Company Law Tribunal, Chennai Bench, addressed the initiation of Corporate Insolvency Resolution Process under the Insolvency & Bankruptcy Code, 2016, ensuring the existence of debt and default, appointing an Interim Resolution Professional, declaring a moratorium, and providing directions for the public announcement of the resolution process.

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