2018 (6) TMI 846 - Tri - Insolvency and Bankruptcy

SBI's Insolvency Petition Against Videocon Industries Admitted, CIRP Commenced

The petition filed by the State Bank of India (SBI) under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Videocon Industries Limited (VIL) ... Corporate insolvency process - eligible debt - Held that:- As admitted factual position thus emerges that the ‘Debt’ as defined U/s 3(11) of The Code under consideration have been classified as “Non-Performing Asset” by the Consortium of Banks, listed hereinabove and there was a “Default” as defined U/s 3(12) of The Code of non-payment. Therefore, the basic requirement of Admission of an Application under Section 7 appears to be fulfilled for initiation of Corporate Insolvency Resolution Process ( CIRP ) . The Financial Creditor has furnished several evidences to establish the existence of the “Financial Debt” and sufficient record to establish the occurrence of “Default”. Rest of the conditions being satisfied, this Petition deserves “Admission”. Upon “Admission” of the Application it is hereby pronounced the declaration of “Moratorium” as mandated in Section 14 of The Code. The declaration of Insolvency Process and commencement of “Moratorium” shall be made by Public Announcement immediately as prescribed U/s. 13 read with Section 15 of The Code Issues Involved:1. Jurisdiction and territorial applicability.2. Financial facilities availed by the Corporate Debtor.3. Default and amount claimed.4. Legal proceedings and defenses raised by the Corporate Debtor.5. Admission of the Petition and initiation of Corporate Insolvency Resolution Process (CIRP).6. Appointment of Interim Resolution Professional (IRP).7. Declaration of Moratorium.Issue-wise Detailed Analysis:1. Jurisdiction and Territorial Applicability:The petition was filed by the State Bank of India (SBI) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (The Code), against the Corporate Debtor, Videocon Industries Limited (VIL), which falls within the territorial jurisdiction of the National Company Law Tribunal (NCLT), Mumbai Bench.2. Financial Facilities Availed by the Corporate Debtor:The Corporate Debtor, part of the Videocon Group, availed several financial facilities from a consortium of banks led by SBI. The financial debts include various loans and working capital facilities detailed in the petition. The total amount of debt granted by the Financial Creditor to the Corporate Debtor was Rs. 3747.85 Crores, with the total outstanding debt as of December 27, 2017, being Rs. 3961.56 Crores.3. Default and Amount Claimed:The petition detailed the amounts and dates of default under various facilities provided by SBI and its associates. The total amount in default as of December 27, 2017, was Rs. 498.63 Crores. Notices demanding payment were issued by the Financial Creditor, but no payment was received, leading to the classification of the debt as a 'Non-Performing Asset' (NPA).4. Legal Proceedings and Defenses Raised by the Corporate Debtor:The Corporate Debtor filed a writ petition before the Bombay High Court seeking to quash a notification by the Reserve Bank of India (RBI) and to appoint an independent rating agency. The Corporate Debtor argued that the insolvency proceedings were initiated despite ongoing negotiations for debt restructuring. The Corporate Debtor also highlighted unforeseen circumstances, such as the cancellation of 2-G licenses and demonetization, which adversely affected its business operations.5. Admission of the Petition and Initiation of CIRP:The Tribunal found that the basic requirements for admission under Section 7 of The Code were met, including the existence of financial debt and default. The Corporate Debtor's management decided not to vehemently oppose the admission of the petition in the larger public interest, facilitating the admission proceedings.6. Appointment of Interim Resolution Professional (IRP):The Financial Creditor proposed Mr. Anuj Jain as the IRP, who provided the requisite certificate confirming no pending disciplinary proceedings. The Tribunal confirmed his appointment.7. Declaration of Moratorium:Upon admission of the application, the Tribunal declared a moratorium as mandated under Section 14 of The Code. This prohibits the institution of any suits or parallel proceedings and ensures that the assets of the debtor are not liquidated until the insolvency process is completed. Essential goods or services to the Corporate Debtor must not be suspended or interrupted during the moratorium period.Conclusion:The petition CP (IB)-02 (MB)/2018 was admitted, and the Corporate Insolvency Resolution Process commenced from the date of the order. The IRP was directed to perform duties as defined under Section 18 of The Code and to submit the resolution plan within the stipulated time frame.