2019 (12) TMI 1405 - Tri - Insolvency and Bankruptcy

Tribunal Admits Creditor's Insolvency Application Against Debtor for Defaulting on Debt

The Tribunal admitted the Financial Creditor's application under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor for ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor or not - existence of debt and dispute or not - HELD THAT:- The Registry of this Tribunal has issued a notice to the Corporate Debtor intimating about the application filed under the Insolvency and Bankruptcy Code Under Section 7 and directed the Corporate Debtor to appear before the Tribunal on 04.12.2019. The notice to Corporate Debtor was duly served. The Corporate Debtor has not appeared before this Tribunal. Therefore, the case has decided ex parte - The Financial Creditor falls under section 5(7) can file an application for initiating corporate insolvency resolution process against a Corporate Debtor before this Adjudicating Authority when the default has occurred. No doubt the debt claimed is a financial debt as defined under section 5(8) of I & B Code. The IRP proposed also has filed a declaration in Form 2 affirming that he is a registered insolvency professional and no disciplinary proceedings are pending against him. Therefore, the application on behalf of Financial Creditor is complete. Application admitted - moratorium declared. Issues:1. Application under Section 7 of the Insolvency and Bankruptcy Code against a Corporate Debtor for default in payment.2. Examination of debt advanced by the Financial Creditor to the Corporate Debtor.3. Correspondences between the Financial Creditor and the Corporate Debtor regarding repayment.4. Appointment of Interim Resolution Professional (IRP) and initiation of Insolvency Resolution Process.Analysis:The Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor for defaulting on a debt of Rs. 87,71,565, which included the principal amount of Rs. 31,00,000 and interest. The Corporate Debtor had given signed blank cheques as a guarantee for the loan, which were never presented due to assurances from the Corporate Debtor. Despite acknowledging the debt in previous financial statements, the Corporate Debtor failed to repay the amount, leading to the legal notice and subsequent petition by the Financial Creditor.The Tribunal found that the Financial Creditor met the requirements under Section 5(7) and 5(8) of the Code to initiate the insolvency resolution process. The Registry served notice to the Corporate Debtor, who failed to appear, resulting in an ex parte decision. The Financial Creditor's application was considered complete, and an Interim Resolution Professional (IRP) was appointed to oversee the resolution process.Upon admission of the application, a moratorium was imposed under Section 14 of the Code, prohibiting legal actions against the Corporate Debtor's assets. Essential services to the Corporate Debtor were to continue during this period. The IRP was tasked with making a public announcement of the initiation of the resolution process and providing progress updates within 30 days. The commencement of the Corporate Insolvency Resolution Process was effective immediately, and all relevant parties were informed of the order.In conclusion, the Tribunal admitted the Financial Creditor's application, appointed an IRP, and set in motion the necessary procedures for the insolvency resolution process, ensuring compliance with the provisions of the Insolvency and Bankruptcy Code.