2018 (1) TMI 1602 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application: Key Provisions and Process Overview

The Karad Urban Co-Op. Bank Limited Financial Creditor Versus Khandoba Prasanna Sakhar Karkhana Limited

The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, finding established defaults and completion of formalities by ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - financial debt - existence of debt and default - HELD THAT:- It is established by the Financial Creditor that the nature of Debt is a ‘Financial Debt' as defined under section 5 (8) of the Code. It has also been established that admittedly there is a ‘Default' as defined under section 3 (12) of the Code on the part of the Corporate Debtor. On the basis of the evidences on record the Applicant Financial Creditor has established that the loan was sanctioned and duly disbursed to the Corporate Debtor but there is non-payment of Debt on the part of the Corporate Debtor - Further, the Debtor has itself filed an Application U/s. 10 of the Code wherein admittedly the Debtor recognises the Applicant herein as the ‘Financial Creditor’ of the Debtor and also that there is Default in the repayment of Debt from the Debtor's side. Hence. Default has been established by the Debtor only. Petition admitted - moratorium declared. Issues Involved: Application under Section 7 of the Insolvency and Bankruptcy Code for admission of insolvency proceedings against a corporate debtor.Detailed Analysis:1. Furnishing of Form No. 1 and Particulars of Corporate Debtor:- The Applicant submitted Form No. 1 invoking Section 7 of the Insolvency and Bankruptcy Code on 7th September, 2017.- The debtor was identified as 'M/s. Khandoba Prasanna Sakhar Karkhana Limited' with relevant details provided.2. Details of Financial Debt and Default:- The total debt granted was Rs. 17,81,84,138/- with a claimed default amount of Rs. 28,46,86,768/-, including interest.- Submissions by the Applicant highlighted the loan sanction, mortgage of properties, issuance of promissory note, and classification of debtor's accounts as non-performing assets.3. Establishment of Default and Financial Debt:- The Financial Creditor demonstrated the nature of debt as a 'Financial Debt' under the Code and established a default by the Corporate Debtor.- The Debtor's own application under Section 10 of the Code acknowledged the Financial Creditor and the default, reinforcing the established default.4. Admission of the Application:- The Tribunal found the application deserving of admission based on established defaults and completion of formalities by the Applicant.- An Insolvency Professional was appointed to conduct the Insolvency Resolution Process, initiating the provisions of Moratorium under Section 14 of the Code.5. Operational Aspects Post-Admission:- The Moratorium was imposed, prohibiting legal actions against the Debtor while ensuring the supply of essential goods and services.- The Interim Resolution Professional was tasked with specific duties under the Code and required to provide progress updates to the Tribunal within 30 days.6. Commencement of Insolvency Resolution Process:- The Petition was admitted, and the Corporate Insolvency Resolution Process commenced from the date of the Order.- The IRP was directed to carry out the Public Announcement and inform the progress of the Resolution Plan as per the Code's provisions.7. Conclusion:- The judgment concluded with the admission of the application, appointment of the IRP, and initiation of insolvency proceedings against the Corporate Debtor, ensuring compliance with the Code's stipulations.