Corporate insolvency process initiated under Insolvency and Bankruptcy Code

The Tribunal admitted the petition under Section 9(5) of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The Corporate Debtor admitted to the debt and default, leading to the declaration of a moratorium under Section 14 of the Code. An Interim Resolution Professional was appointed, and the Operational Creditor was directed to deposit funds for immediate expenses. The decision was communicated to all relevant parties and forwarded to the Insolvency and Bankruptcy Board of India for record-keeping.

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Issues:
1. Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process.
2. Unpaid operational debt claimed by the Applicant against the Corporate Debtor.
3. Admission of debt and default by the Corporate Debtor during the hearing.
4. Initiation of Corporate Insolvency Resolution Process and declaration of moratorium.
5. Appointment of Interim Resolution Professional and deposit of funds by the Operational Creditor.

Analysis:
1. The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Applicant, seeking to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor. The Applicant, a Sole Proprietor of a construction company, claimed unpaid operational debt amounting to Rs. 1,47,75,061/- for construction services provided to the Corporate Debtor. The default date was mentioned as 15.09.2021, and relevant documents such as invoices and MOUs were submitted to establish the default.

2. During the hearing, the Corporate Debtor admitted to the debt and default committed. The Counsel for the Corporate Debtor acknowledged the liability, supported by email communications from the Corporate Debtor confirming the debt. In light of this admission and the evidence presented, the Tribunal found that the Operational Creditor had successfully established the default on the part of the Corporate Debtor, fulfilling the legal requirements under the IBC.

3. Consequently, the Tribunal admitted the petition under Section 9(5) of the IBC, initiating the Corporate Insolvency Resolution Process and declaring a moratorium under Section 14 of the Code. The moratorium imposed various prohibitions, including the institution of suits, transfer of assets, enforcement of security interests, and recovery of property against the Corporate Debtor.

4. The Tribunal appointed an Interim Resolution Professional (IRP) to oversee the resolution process. Mr. Mohit Goyal was appointed as the IRP, subject to certain conditions, and directed to fulfill the obligations mandated under the IBC. The Operational Creditor was instructed to deposit Rs. 2,00,000/- with the IRP to cover immediate expenses, with the amount subject to adjustment by the Committee of Creditors.

5. The Tribunal ordered the immediate communication of the decision to the Operational Creditor, Corporate Debtor, and the appointed IRP. Additionally, the decision was to be forwarded to the Insolvency and Bankruptcy Board of India (IBBI) for record-keeping purposes, ensuring transparency and compliance with regulatory requirements.

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