2017 (11) TMI 1992 - Tri - Insolvency and Bankruptcy

Court grants application for Corporate Insolvency Resolution Process under Insolvency and Bankruptcy Code

In Re : Dream Land Realtor Private Limited.

In Re : Dream Land Realtor Private Limited. - TMI Issues:1. Application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.2. Definition of corporate applicant under Section 5(5) of the Code.3. Compliance with Section 10(3)(a) and (b) of the Code.4. Default committed by the applicant company.5. Objection raised by the financial creditor.6. Relevance of judgments by NCLAT.7. Provisions of the Insolvency & Bankruptcy Code, 2016.8. Initiation of Corporate Insolvency Resolution Process by the Corporate Debtor under Section 10 of the Code.9. Admittance of the application and commencement of the corporate insolvency resolution process.10. Issuance of moratorium under Section 14 of the Code.Analysis:1. The judgment pertains to an application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 for the initiation of Corporate Insolvency Resolution Process concerning the applicant company itself. The application was filed by the director of the company as authorized under the Code.2. The definition of a corporate applicant under Section 5(5) of the Code includes the corporate debtor itself, a member/partner authorized by the constitutional document, an individual managing operations, or a person overseeing financial affairs. In this case, the applicant company qualifies as a corporate applicant.3. The applicant company complied with Section 10(3)(a) and (b) of the Code by submitting audited financial statements for the last two financial years and proposing an Interim Resolution Professional as required. The proposed IRP affirmed eligibility and absence of pending disciplinary proceedings.4. The applicant company had defaulted on payments, leading to a significant financial loss and subsequent declaration as a non-performing asset by the creditor, justifying the application under Section 10 of the Code.5. The financial creditor raised objections regarding the applicant's ability to satisfy the debt and ongoing proceedings under SARFAESI Act. However, unsupported allegations and existing legal actions did not invalidate the application.6. Reference to judgments by NCLAT highlighted that proceedings under SARFAESI Act do not bar insolvency proceedings under the Code, emphasizing the applicant's right to initiate the process.7. The judgment elaborated on the provisions and objectives of the Insolvency & Bankruptcy Code, 2016, emphasizing reorganization and resolution of corporate entities to maximize asset value and balance stakeholder interests.8. Detailed compliance with Form-6 requirements under Section 10 of the Code, including disclosure of financial debts, operational creditors, security details, and submission of necessary documents, justified the admission of the application.9. The court admitted the application, confirming the applicant's default and commencing the corporate insolvency resolution process under Section 10 of the Code.10. A moratorium was issued under Section 14 of the Code, prohibiting certain actions against the corporate debtor and ensuring the supply of essential goods/services during the process, with the appointment of an Interim Resolution Professional to oversee the proceedings.This comprehensive analysis covers the key issues addressed in the judgment, detailing the legal aspects and procedural requirements involved in the application for Corporate Insolvency Resolution Process.