2017 (11) TMI 888 - Tri - Companies Law

Tribunal Admits Corporate Insolvency Resolution Process Application: Moratorium Declared Under Insolvency and Bankruptcy Code

M/s. Consolidated Construction Consortium Limited Versus M/s. VA Tech Wabag Limited

The Tribunal admitted the Corporate Insolvency Resolution Process application, allowing for the declaration of a moratorium under the Insolvency and ... Corporate Insolvency Resolution Process - Held that:- 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. Issues:1. Admission of Corporate Insolvency Resolution Process Application2. Settlement of outstanding amount by the Corporate Debtor3. Appointment of Insolvency Resolution Professional (IRP)4. Declaration of moratorium and its implications5. Compliance by the IRP and other stakeholdersIssue 1: Admission of Corporate Insolvency Resolution Process ApplicationThe Tribunal, after considering arguments from both parties, found that the Operational Creditor had fulfilled all legal requirements for admission of the application. The Bench decided that the application was fit for admission to initiate the Corporate Insolvency Resolution Process and declare a moratorium under the Insolvency and Bankruptcy Code, 2016. However, in the interest of justice, the Corporate Debtor was given an opportunity to settle the outstanding amount within 15 days; otherwise, the application would be considered for admission.Issue 2: Settlement of outstanding amount by the Corporate DebtorThe Corporate Debtor, during subsequent hearings, submitted a Demand Draft for 50% of the principal amount ordered to be paid along with interest. The Corporate Debtor expressed willingness to pay only half of the principal amount and refused to pay any interest, contrary to earlier submissions. The Operational Creditor disagreed with this proposal, insisting that the principal amount along with interest should be paid. As the parties could not reach an agreement, the Tribunal admitted the application and ordered the commencement of the Corporate Insolvency Resolution Process.Issue 3: Appointment of Insolvency Resolution Professional (IRP)The Tribunal appointed an IRP proposed by the Operational Creditor to manage the Corporate Debtor's affairs immediately. The appointed IRP had no pending disciplinary proceedings and was directed to make a public announcement, call for creditor claims, and ensure compliance with the Insolvency and Bankruptcy Code, 2016.Issue 4: Declaration of moratorium and its implicationsA moratorium was declared from the date of the order until the completion of the corporate insolvency resolution process. This moratorium prohibited various actions, including instituting suits against the corporate debtor, transferring assets, enforcing security interests, and recovering property. Essential goods or services supply to the Corporate Debtor could not be terminated during this period.Issue 5: Compliance by the IRP and other stakeholdersThe IRP was instructed to comply with specific sections of the Code and was expected to receive assistance and cooperation from the Corporate Debtor's Directors, Promoters, and management associates. The application was disposed of, and the Operational Creditor and Registry were directed to provide necessary copies of the order to the IRP for compliance.Overall, the Tribunal admitted the application, appointed an IRP, declared a moratorium, and outlined compliance requirements for the IRP and other stakeholders involved in the Corporate Insolvency Resolution Process.