Tribunal Admits Insolvency Application, Appoints Interim Resolution Professional, Declares Moratorium

The tribunal admitted the application for initiating the corporate insolvency resolution process, appointed Mr. Prakash Dev Sharma as the Interim Resolution Professional, declared a moratorium, and issued directions to ensure compliance with the Insolvency and Bankruptcy Code, safeguarding the interests of all stakeholders.

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Issues Involved:
1. Compliance with statutory requirements for filing the application.
2. Financial and operational debt details.
3. Appointment and eligibility of the Interim Resolution Professional.
4. Default and SARFAESI notices.
5. Financial statements and liabilities.
6. Admission of the application and commencement of the corporate insolvency resolution process.
7. Declaration of moratorium and related directions.

Detailed Analysis:

1. Compliance with Statutory Requirements for Filing the Application:
The application was filed by the corporate debtor under Section 10 of the Insolvency and Bankruptcy Code, 2016, in statutory form No.6 as prescribed by sub-rule (1) of rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Initially, there were deficiencies in the affidavit and other documents, which were rectified as directed by the tribunal.

2. Financial and Operational Debt Details:
The applicant company disclosed its financial and operational creditors, listing significant debts owed to Punjab National Bank, Canara Bank, ICICI Bank, and Siemens Financial Services Ltd., with a total debt raised from financial creditors amounting to Rs. 206.64 crores and an amount in default of Rs. 200.37 crores. The operational creditors included government departments, raw material suppliers, workers/employees, and service providers, with a total debt raised of Rs. 10.34 crores and an amount in default of Rs. 14.60 crores.

3. Appointment and Eligibility of the Interim Resolution Professional:
The applicant proposed Mr. Prakash Dev Sharma as the Interim Resolution Professional (IRP), who filed the necessary written communication in form No.2, declaring his eligibility and absence of any disciplinary proceedings against him. The tribunal confirmed his appointment for a period of thirty days or as determined by the Committee of Creditors.

4. Default and SARFAESI Notices:
The applicant represented defaults in payment of dues leading to notices under Section 13(2) and 13(4) of the SARFAESI Act, 2002, issued by Punjab National Bank, Canara Bank, ICICI Bank, and Siemens Financial Services Ltd., for amounts of Rs. 118.70 crores, Rs. 67.12 crores, Rs. 8.15 crores, and Rs. 6.40 crores respectively.

5. Financial Statements and Liabilities:
The applicant provided audited financial statements for the years ending 31.03.2015 and 31.03.2016, and unaudited statements for the period up to 26.03.2017. The accumulated losses, long-term borrowings, current liabilities, and revenue from operations were detailed, indicating significant financial distress and a debt trap.

6. Admission of the Application and Commencement of Corporate Insolvency Resolution Process:
The tribunal found that the application met the requirements of Section 10 of the Code, indicating the existence of a corporate debtor and default. The tribunal admitted the application to prevent further erosion of capital and safeguard the assets of the corporate debtor, directing the IRP to take control of the management and assets.

7. Declaration of Moratorium and Related Directions:
The tribunal declared a moratorium as per Section 14 of the Code, prohibiting:
(a) Institution or continuation of suits or proceedings against the corporate debtor.
(b) Transfer or disposal of the corporate debtor’s assets.
(c) Actions to foreclose or enforce security interests.
(d) Recovery of property occupied by the corporate debtor.
The IRP was directed to make a public announcement and file weekly reports on the progress of the insolvency resolution process.

Conclusion:
The tribunal admitted the application for initiating the corporate insolvency resolution process, appointed Mr. Prakash Dev Sharma as the IRP, declared a moratorium, and issued directions to ensure compliance with the Code and safeguard the interests of all stakeholders.

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