Tribunal admits Corporate Debtor for Insolvency Resolution Process: Moratorium declared, IRP appointed

The Tribunal admitted the Corporate Debtor into Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code. A moratorium was declared under Section 14, appointing an Interim Resolution Professional to oversee the process. The IRP was tasked with managing the company's operations, ensuring continuity, and safeguarding assets. The Operational Creditor was directed to provide funds for the resolution process. The decision was based on evidence of default and non-payment, initiating procedures to address the insolvency issue in compliance with the Code.

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Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process due to default in paying operational debt.

Analysis:
The Operational Creditor, a registered partnership firm, filed an application against the Corporate Debtor for defaulting on operational debt amounting to Rs. 1,12,41,485/- plus interest. The debt arose from the sale and supply of goods to the Corporate Debtor, specifically "Phenol," between May and August 2017. Despite repeated demands and a notice under Section 8 of the I.B. Code, the Corporate Debtor failed to pay the outstanding amount or raise any pre-existing dispute. The application sought to initiate the Corporate Insolvency Resolution Process based on the default.

The Corporate Debtor, despite being duly served notice, did not file an affidavit in reply or participate in the proceedings. The Operational Creditor presented all invoices and evidence of non-payment by the Corporate Debtor, which remained unchallenged on record. The Corporate Debtor received the notice under Section 8 of the I.B. Code but neither responded with a pre-existing dispute nor made any payment towards the debt.

The Tribunal, after hearing the arguments and examining the evidence, found the application to be defect-free and admitted the Corporate Debtor into the Corporate Insolvency Resolution Process under Section 9 of the I.B. Code. Consequently, a moratorium was declared under Section 14 of the Code, prohibiting various actions against the Corporate Debtor, and an Interim Resolution Professional (IRP) was appointed to oversee the resolution process.

The IRP was tasked with managing the operations of the Corporate Debtor as a going concern, ensuring the continuity of supplies, and protecting the company's assets. The Operational Creditor was directed to provide an advance amount to the IRP for the smooth conduct of the resolution process. The Tribunal issued specific directives regarding the IRP's responsibilities, the submission of claims, and the communication of the order to relevant parties and authorities.

In conclusion, the Tribunal's decision to admit the Corporate Debtor into the resolution process was based on the evidence of default and non-payment presented by the Operational Creditor, leading to the initiation of necessary procedures to resolve the insolvency issue in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016.

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