Corporate Debtor Faces CIRP for Rs. 25.99 Cr Default; Moratorium Imposed, IRP Appointed for Asset Protection & Ops Continuity.

The NCLT, Ahmedabad admitted the Financial Creditor's application under Section 7 of the IBC, 2016, initiating CIRP against the Corporate Debtor for a default of Rs. 25,99,22,676. The Tribunal appointed an IRP, imposed a moratorium under Section 14(1), and directed the IRP to manage the Corporate Debtor's affairs, ensuring continuity of operations and protection of assets. The order mandated public announcement of CIRP initiation and required the Financial Creditor to advance funds for CIRP proceedings. The application was disposed of in favor of the Financial Creditor, with communication of the order to relevant parties and authorities.

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Issues: Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on default in payment of financial debt.

In this judgment by the National Company Law Tribunal, Ahmedabad, the Financial Creditor filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 against the Corporate Debtor for defaulting on a financial debt of Rs. 25,99,22,676. The agreement between the parties outlined the terms of a loan facility, including repayment and interest details. Despite partial repayments, a significant outstanding amount remained unpaid by the Corporate Debtor, leading to the application for CIRP. The Corporate Debtor admitted its inability to repay due to financial difficulties. The Tribunal found the application complete and devoid of defects, appointing the proposed Interim Resolution Professional (IRP) and acknowledging the admission of debt by the Corporate Debtor.

The Tribunal determined that the debt was due and payable, not barred by limitation, and that a default had occurred as per the provisions of the Insolvency & Bankruptcy Code, 2016. Consequently, the Tribunal decided to admit the application under Section 7 of the Code, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The order included directions for moratorium under Section 14(1) of the Code, prohibiting various actions against the Corporate Debtor, effective until the completion of the CIRP or approval of a Resolution Plan. The appointed IRP was tasked with specific functions under the Code, and the Financial Creditor was directed to provide an advance for the smooth conduct of the CIRP.

Additionally, the IRP was instructed to make a public announcement of the CIRP initiation, manage the Corporate Debtor as a going concern, and ensure the continuity of goods/services supply during the moratorium period. The Tribunal emphasized the duty of the IRP to protect and preserve the Corporate Debtor's property value and operations. The judgment concluded with directives for communication of the order to relevant parties and regulatory authorities, along with the disposal of the application in favor of the Financial Creditor.

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