Corporate Insolvency Resolution Process initiated against Corporate Debtor for default in repayment

The Tribunal admitted the Company Petition for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor based on default in repayment. A moratorium was declared, prohibiting certain actions against the Corporate Debtor, and an Interim Resolution Professional was appointed. The Tribunal issued detailed directions regarding the moratorium, appointment of the Interim Resolution Professional, and compliance with IBBI regulations. The judgment emphasized the default in repayment as the reason for initiating the CIRP and outlined the legal procedures to be followed during the resolution process.

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Issues:
Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016 based on default in repayment by the Corporate Debtor.

Analysis:
The Company Petition was filed by the Financial Creditor seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor due to default in repaying an amount of Rs. 8,51,35,527 (including taxes) as on 13.09.2018. The application was filed by two applicants, the Financial Creditor and the Co-Applicant/Debenture Trustee, who was appointed as Debenture Trustee under an agreement with the Corporate Debtor. The Corporate Debtor had issued debentures to the Financial Creditor, and upon default in coupon payments, the Co-Applicant demanded the dues, leading to the initiation of the CIRP. The Corporate Debtor did not raise objections, and the Tribunal admitted the Company Application appointing an Interim Resolution Professional.

The Tribunal declared a moratorium prohibiting various actions against the Corporate Debtor, including institution or continuation of suits, transferring assets, enforcing security interests, and recovering property. Essential goods or services supply to the Corporate Debtor was not to be terminated during the moratorium period. Certain transactions exempted from Section 14 of the IBC were specified. The moratorium was effective from 27.03.2019 until the completion of the CIRP or approval of a resolution plan or liquidation order. The public announcement of the CIRP was mandated, and an Interim Resolution Professional was appointed to carry out the necessary functions in compliance with IBBI regulations.

In conclusion, the Tribunal admitted the Petition, directed the Registry to communicate the order to relevant parties, and issued detailed directions regarding the moratorium, appointment of an Interim Resolution Professional, and compliance with IBBI regulations. The judgment focused on the default in repayment by the Corporate Debtor, leading to the initiation of the CIRP and the subsequent legal actions and directions to be followed during the resolution process.

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