2017 (11) TMI 689 - Tri - Companies Law

Tribunal Orders Corporate Insolvency Resolution Process despite Debtor's Partial Payment Offer

The Tribunal admitted the application for Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016, despite the Corporate ... Corporate Insolvency Resolution Process - Held that:- We order the commencement of the Corporate Insolvency Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. We appoint Mr. Pathukasahasram Raghunathan Raman, as IRP, who has been proposed by the Operational Creditor. There is no disciplinary proceedings pending against the IRP as evidenced from Form-2 and his name is reflected in IBBI website. The IRP is directed to take charge of the Corporate Debtor’s management immediately. IRP is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date the copy of this Order is received, and call for submissions of claim by the creditors in the manner as prescribed. We declare the moratorium which shall have effect from the date of this Order till the completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code, 2016. The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply to such transactions, as notified by the Central Government. The IRP shall comply with the provisions of Sections 13(2), 15, 17 & 18 of the Code. The Directors of the Corporate Debtor, its Promoters or any person associated with the management of the Corporate Debtor is expected to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his functions under Section 20 of the I&B Code, 2016. Accordingly, the application is disposed of. Issues:Admission of Corporate Insolvency Resolution Process, Settlement of outstanding amount, Appointment of Insolvency Resolution Professional, Declaration of moratorium.Admission of Corporate Insolvency Resolution Process:The Tribunal, after considering the arguments of the Operational Creditor and Corporate Debtor, found the application fit for admission under the Insolvency and Bankruptcy Code, 2016. Despite the Corporate Debtor's willingness to pay only 50% of the principal amount and refusal to pay interest, the Tribunal concluded that the defense presented was legally weak and unsupported by evidence. Therefore, the Tribunal admitted the application and ordered the commencement of the Corporate Insolvency Resolution Process, with a stipulated completion period of 180 days from the date of the order.Settlement of Outstanding Amount:Initially, the Corporate Debtor was given an opportunity to settle the outstanding amount within 15 days from the date of the order. However, during subsequent hearings, the Corporate Debtor expressed willingness to pay only 50% of the principal amount and refused to pay any interest. The Operational Creditor disagreed with this proposal, insisting on full payment of the principal amount along with interest. As the parties failed to reach an agreement, the Tribunal admitted the application and ordered the Corporate Insolvency Resolution Process to proceed.Appointment of Insolvency Resolution Professional:The Tribunal appointed an Insolvency Resolution Professional (IRP) proposed by the Operational Creditor to manage the affairs of the Corporate Debtor. The appointed IRP was directed to take charge immediately, issue a public announcement, and call for submissions of claims from creditors. The IRP was also mandated to comply with specific provisions of the Insolvency and Bankruptcy Code, 2016, and ensure the continuity of essential goods or services supplied by the Corporate Debtor during the moratorium period.Declaration of Moratorium:A moratorium was declared from the date of the order until the completion of the Corporate Insolvency Resolution Process. The moratorium prohibited various actions against the Corporate Debtor, including the institution of suits, transfer of assets, recovery of property, and termination of essential services. Directors, promoters, and management associates of the Corporate Debtor were directed to cooperate with the IRP as per the provisions of the Code. The Tribunal directed the Operational Creditor and Registry to provide necessary copies of the order to facilitate compliance with the Code.