Tribunal Initiates Insolvency Process, Appoints Resolution Professional

The Tribunal admitted the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, and initiated the Corporate Insolvency Resolution Process against the corporate debtor. A Moratorium was declared, and Mr. Partha Pratim Ghosh was appointed as the Interim Resolution Professional. The Tribunal directed necessary public announcements and compliance with the procedural requirements of the Insolvency and Bankruptcy Code, 2016. The matter was listed for filing of the Progress Report on 10/09/2020.

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Issues Involved:
1. Urgency of hearing due to the deterioration of the value of the corporate debtor.
2. Admission of default by the corporate debtor.
3. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
4. Declaration of Non-Performing Asset (NPA) by the financial creditors.
5. Compliance with the requirements under Section 7 of the Insolvency and Bankruptcy Code, 2016.
6. Appointment of Interim Resolution Professional (IRP).
7. Declaration of Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Urgency of Hearing:
The case was listed urgently due to the "deterioration of the value of the corporate debtor (CD)" which was not in operation, and the raw materials kept in the factory were chemicals. The urgency was compounded by the disruption of the Tribunal's work due to the Covid-19 pandemic and consequential lockdown.

2. Admission of Default:
The corporate debtor, represented by counsel, filed written notes of defense, "fairly admitting the default." This admission was crucial as it indicated the debtor's acknowledgment of failing to meet its financial obligations.

3. Initiation of CIRP:
The petition was filed jointly by Bank of Baroda and State Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor for a total default amount of Rs. 208,89,62,561.80. The financial creditors had provided various credit facilities to the corporate debtor, which were sanctioned and availed under consortium banking arrangements.

4. Declaration of NPA:
Due to the corporate debtor's failure to repay the outstanding sums as per the terms of the agreements, the financial creditors declared the corporate debtor's account as a Non-Performing Asset (NPA) on 31/12/2018 and 28/12/2018, respectively. The corporate debtor acknowledged their debt through Letters of Acknowledgement and revival letters.

5. Compliance with Section 7 Requirements:
The Tribunal noted that the application was filed in the proper form, and the applicants produced several documents, including loan sanction letters, agreements, final recall notice, Information Utility Certificate, and CIBIL Report. The Tribunal was satisfied that the corporate debtor had committed default, and the application was complete with no disciplinary proceedings against the proposed resolution professional.

6. Appointment of IRP:
The financial creditors proposed the name of Mr. Partha Pratim Ghosh as the Interim Resolution Professional (IRP), and his written communication was submitted. The Tribunal appointed Mr. Ghosh as the IRP to ascertain the particulars of creditors and convene a meeting of the Committee of Creditors for evolving a Resolution Plan.

7. Declaration of Moratorium:
The Tribunal declared a Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, prohibiting:
- The institution or continuation of suits or proceedings against the corporate debtor.
- Transferring, encumbering, alienating, or disposing of any assets of the corporate debtor.
- Actions to foreclose, recover, or enforce any security interest created by the corporate debtor.
- Recovery of any property by an owner or lessor where such property is occupied by the corporate debtor.

The moratorium was to have effect from the date of admission till the completion of the Corporate Insolvency Resolution Process, or until the approval of the resolution plan or liquidation order.

Conclusion:
The Tribunal admitted the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, and initiated the Corporate Insolvency Resolution Process against the corporate debtor. A Moratorium was declared, and Mr. Partha Pratim Ghosh was appointed as the Interim Resolution Professional. The Tribunal directed necessary public announcements and compliance with the procedural requirements of the Insolvency and Bankruptcy Code, 2016. The matter was listed for filing of the Progress Report on 10/09/2020.

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