Tribunal admits application under Insolvency Code, initiates Corporate Resolution Process

The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The default was established, leading to the appointment of an Interim Resolution Professional and declaration of a moratorium to protect the Corporate Debtor's assets during the resolution process.

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Issues Involved:
1. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Financial Creditor's claim and evidence of default.
3. Corporate Debtor's defense and counter-arguments.
4. Compliance with Joint Lending Arrangements and related agreements.
5. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium.

Detailed Analysis:

1. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the Financial Creditor (Syndicate Bank) under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (M/s. Bhadreshwar Vidyut Private Limited). The Tribunal examined the application and found it complete in all respects, satisfying the requirements under sub-section 2 of Section 7 of the I&B Code, 2016.

2. Financial Creditor's claim and evidence of default:
The Financial Creditor claimed an outstanding amount of Rs. 32,22,50,660.16 as of 29.07.2019. The Corporate Debtor had approached a consortium of banks for financial assistance, and the Financial Creditor had sanctioned a fund-based limit of Rs. 31 Crores and a non-fund-based limit of Rs. 105 Crores. The Corporate Debtor failed to adhere to the terms and conditions of the sanction, resulting in the account being classified as Non-Performing Asset (NPA) on 30.06.2018. The Financial Creditor issued a recall notice on 05.12.2018, calling upon the Corporate Debtor to clear the outstanding amount. The Tribunal was satisfied with the evidence provided by the Financial Creditor, including the CRILC Report and Statement of Accounts, proving the default.

3. Corporate Debtor's defense and counter-arguments:
The Corporate Debtor argued that the application was premature and not maintainable, as the Financial Creditor held only 1.64% of the total debt value. The Corporate Debtor highlighted the project's total cost and the financial assistance received from other lenders. They faced delays and difficulties in obtaining clearances and permissions, affecting their operations. The Corporate Debtor contended that the Financial Creditor unilaterally reduced the working capital limits, causing further financial difficulties. They also argued that the Financial Creditor's action was contrary to the Joint Lending Arrangement and RBI guidelines, as the majority of lenders were considering a resolution plan.

4. Compliance with Joint Lending Arrangements and related agreements:
The Tribunal examined the various agreements, including the Working Capital Consortium Agreement, Master Inter-Creditor Agreement (MICA), and Trust and Retention Agreement (TRA). The Corporate Debtor argued that the Financial Creditor violated these agreements by unilaterally reducing the working capital limits and initiating the CIRP process. However, the Tribunal noted that the Financial Creditor had complied with the requirements for initiating the CIRP process, and the default was established.

5. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium:
The Tribunal appointed Jayashree S Iyer as the Interim Resolution Professional (IRP) and declared a moratorium under Section 14(1) of the I&B Code, 2016. The moratorium would include the institution or continuation of suits or proceedings against the Corporate Debtor, transferring or disposing of any assets, and recovery of any property by an owner or lessor. The moratorium would remain in effect until the completion of the CIRP or until the Tribunal approves a resolution plan or passes an order for liquidation.

Conclusion:
The Tribunal admitted the application under Section 7 of the I&B Code, 2016, initiating the CIRP against the Corporate Debtor. The Tribunal found that the default had occurred, and the application was complete in all respects. The IRP was appointed, and a moratorium was declared, ensuring the protection of the Corporate Debtor's assets and interests during the CIRP process.

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