2019 (3) TMI 1929 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Petition Admitted, Resolution Process Initiated

BMW India Financial Services Private Limited Versus S.K. Wheels Private Limited

The Adjudicating Authority admitted the petition for Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016, ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Dishonor of Cheque - insufficiency of funds - HELD THAT:- The Petition reveals that on 11.05.2018 the Corporate Debtor had defaulted in making repayment to the Petitioner in terms of the Facility Agreements executed by it. In this regard, a meeting was held, wherein the delinquencies under the Facility Agreements were categorically discussed at length, and upon such discussion the Corporate Debtor had admitted to such delinquencies and handed over 4 cheques to the Petitioner amounting to ₹ 1,38,46,268/-. On 08.06.2018, out of the said 4 cheques, the cheque bearing no’s. 152934 and 152935 dated 29.05.2018 were dishonoured and returned with the remark “Funds Insufficient”. And, the cheque bearing no’s. 152937 and 152938 were not presented on the request of the Corporate Debtor due to non-availability of funds - Petition further reveals that on 13.06.2018 the Corporate Debtor had once again admitted its default and reassured that the entire payment under the Facility Agreements would be made at the earliest. Pursuant to the said meeting, on 14.06.2018, the Corporate Debtor had written an e-mail to the Petitioner thereby admitting its default under the Facility Agreements. The Corporate Debtor is liable to pay the Petitioner and defaulted in making the payment to the Petitioner. During the hearing of this matter by this Bench, the Counsel representing the Corporate Debtor accepted the liability as well as default - This Adjudicating Authority, on perusal of the documents filed by the Creditor, is of the view that the Corporate Debtor defaulted in repaying the loans availed and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore the Application under subsection (2) of Section 7 is taken as complete. Petition admitted - moratorium declared. Issues:Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016.Analysis:The petitioner, BMW India Financial Services Private Limited, sought the Corporate Insolvency Resolution Process of S. K. Wheels Private Limited based on default in repayment of facilities granted. The default amounted to Rs. 8,43,00,350/- towards principal and Rs. 89,50,515/- towards interest, as provided under Section 7 of the Insolvency and Bankruptcy Code, 2016. The petitioner had granted various facilities to the corporate debtor, and the outstanding amount as of 12.10.2018 was detailed in the petition. The petitioner enclosed security documents related to the sanction of loan facilities, including agreements and statements of accounts. The corporate debtor defaulted on repayment, leading to discussions and the handing over of cheques, some of which were dishonored due to insufficient funds. The corporate debtor admitted to default on multiple occasions, and during the hearing, the counsel representing the corporate debtor accepted the liability and default.The Adjudicating Authority found that the corporate debtor defaulted in repaying the loans availed and appointed an Insolvency Resolution Professional. The Authority admitted the petition, prohibiting various actions against the corporate debtor, including suits, alienation of assets, and recovery of property. The order of moratorium was to be effective until the completion of the corporate insolvency resolution process. The public announcement of the corporate insolvency resolution process was mandated, and an Interim Resolution Professional was appointed to carry out the necessary functions. The Registry was directed to communicate the order to all parties and the Interim Resolution Professional promptly.