2017 (12) TMI 974 - Tri - Insolvency and Bankruptcy

Financial Creditor's Petition Admitted for Insolvency Proceedings under Section 14

The court admitted the petition filed by the Financial Creditor based on evidence of default by the Corporate Debtor, leading to the declaration of a ... Corporate insolvency resolution process - whether the Corporate Debtor has committed a default for enabling the “Financial Creditor” to file application before the Adjudicating Authority in terms of Section 7 of the Code? - Held that:- Under clause (b) of Section 7 (3) of the Code, the name of Insolvency Resolution Professional is required to be proposed by the Financial Creditor. Copy of the written communication in Form No.2 furnished by the Interim Resolution Professional is at Annexure A-7. Mr. Anil Kohli has been registered with Insolvency & Bankruptcy Board of India vide Registration No. IBBI/IPA-001/IP/P00112/2017-18/10219. He has given the necessary information. He has been appointed as Interim Resolution Professional in one case and as Resolution Professional in two cases already, but certified that there are no disciplinary proceedings pending against him. The written communication sent by Mr. Anil Kohli in Form No.2 is in order. No defect in the application has been pointed out and complete information has been given. In view of the above, the instant petition deserves to be admitted. The petition is thus admitted and the moratorium is declared for prohibiting all the following in terms of sub-section (1) of Section 14 of the Code Issues Involved:1. Default by the Corporate Debtor.2. Evidence of default provided by the Financial Creditor.3. Appointment of Insolvency Resolution Professional.4. Moratorium declaration.Detailed Analysis:1. Default by the Corporate Debtor:The primary issue to be determined is whether the Corporate Debtor has committed a default enabling the Financial Creditor to file an application before the Adjudicating Authority under Section 7 of the Insolvency and Bankruptcy Code, 2016. The term 'default' is defined in sub-section (12) of Section 3 of the Code as non-payment of debt when due. In this case, the Corporate Debtor has admitted to defaulting on its financial obligations. The Corporate Debtor's balance sheet as of 31.03.2016 shows an outstanding principal amount of Rs. 1383,00,000/- with added interest of Rs. 1,88,56,906/-.2. Evidence of Default Provided by the Financial Creditor:Subsection (3) of Section 7 of the Code requires the Financial Creditor to furnish evidence of default. The Financial Creditor has provided comprehensive evidence, including loan documents, security creation records, ROC charge certificates, agreements, and hypothecation deeds. The amount in default is detailed in the application, and the Corporate Debtor has acknowledged an outstanding amount of Rs. 26,49,50,000/- as of 01.01.2015. The last payment made by the Corporate Debtor was on 30.06.2015. The Financial Creditor has also submitted statements of account certified under the Banker’s Books Evidence Act and a CIBIL report dated 08.08.2017 as proof of default.3. Appointment of Insolvency Resolution Professional:Under clause (b) of Section 7 (3) of the Code, the Financial Creditor must propose the name of an Insolvency Resolution Professional. The proposed Interim Resolution Professional, Mr. Anil Kohli, is registered with the Insolvency & Bankruptcy Board of India and has provided the necessary information and certifications, including that there are no disciplinary proceedings pending against him. His written communication in Form No.2 is in order.4. Moratorium Declaration:Upon admitting the petition, a moratorium is declared prohibiting:(a) Institution or continuation of suits or proceedings against the Corporate Debtor.(b) Transferring, encumbering, or disposing of any assets or legal rights of the Corporate Debtor.(c) Actions to foreclose, recover, or enforce security interests.(d) Recovery of property occupied by the Corporate Debtor.The moratorium ensures that the supply of essential goods or services to the Corporate Debtor, if ongoing, shall not be terminated or suspended during the moratorium period. The moratorium will be effective from the date of the order until the completion of the corporate insolvency resolution process or until an order is passed for liquidation.Conclusion:The petition is admitted, and the moratorium is declared as per Section 14 of the Code. The matter is listed for formal orders of appointment of the Interim Resolution Professional on 04.12.2017.