2018 (12) TMI 78 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application, Declares Moratorium, Appoints IRP: Protecting Stakeholders' Interests

The Tribunal admitted the application to initiate insolvency resolution against the corporate debtor, declared a moratorium, and appointed an Interim ... Initiating the insolvency resolution process against the respondent-corporate debtor - Default in payment - Held that:- The amount claimed to be defaulted and the date on which the default occurred are also mentioned in column No. 2 of Part IV of the application. In Form -I statement of account of the respondent-corporate debtor for the period of 17. 06. 2015 to 31. 01. 2018 has been attached which has been certified by the Assistant General Manager who is also In-charge of the Computer Systems Bank of the Financial Creditor in order to comply with the requirements of Section 2(A) of the Bankers Books Evidence Act, 1891. This certificate is at page 978 of the paper book. The petitioner has also filed the CIBIL report in order to support the evidence of default and that report is at Annexure A/79. The requirements of Clause (a) of Section 7(3) of the Code have been fulfilled. It is mandatory for the financial creditor to name the Resolution Professional proposed to be appointed as Interim Resolution Professional as required by Clause (b) of Section 7(3) of the Code. The petitioner has proposed the name of Mr. Vikram Kumar, registered Resolution Professional, who has furnished the written communication in Form-II as at Annexure A/81. As perused the written communication and have found the same to be in order. It is certified that there are no disciplinary proceedings pending against the proposed Interim Resolution Professional with the Insolvency and Bankruptcy Board of India or Indian Institute of Insolvency Professionals of ICAI. Presently, he is serving as an Interim Resolution Professional/Resolution Professional in two proceedings. Thus petition is admitted Issues Involved:1. Initiation of the insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code, 2016.2. Compliance with procedural requirements and documentation.3. Admission of the petition and declaration of moratorium.4. Appointment and duties of the Interim Resolution Professional (IRP).Detailed Analysis:1. Initiation of the Insolvency Resolution Process:The application was filed by Oriental Bank of Commerce, a financial creditor, under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the insolvency resolution process against the respondent-corporate debtor. The petitioner, represented by Mr. Harmeet Singh Phillip, Chief Manager, was authorized by a Power of Attorney dated 04.09.2003.2. Compliance with Procedural Requirements and Documentation:The Tribunal observed that the initial petition lacked the date of default, which was later amended and resubmitted with necessary details. The petitioner provided various documents, including the authority letter dated 20.07.2018, sanction letters, and security documents executed by the corporate debtor. The financial facilities granted amounted to Rs. 350 crores, later reduced to Rs. 280 crores. The corporate debtor executed multiple security documents, including agreements for term loans, hypothecation of assets, and counter guarantees. The last payment towards the loan was made on 09.05.2017, and the account was classified as NPA on 31.08.2017.3. Admission of the Petition and Declaration of Moratorium:The Tribunal admitted the petition after confirming compliance with the requirements of Section 7(3) of the Code. The financial creditor provided evidence of default, including certified statements of account and a CIBIL report. The moratorium was declared, prohibiting the institution or continuation of suits, transferring or disposing of assets, and actions to foreclose or recover any security interest. The supply of essential goods or services to the corporate debtor was also protected from termination during the moratorium.4. Appointment and Duties of the Interim Resolution Professional (IRP):Mr. Vikram Kumar was appointed as the Interim Resolution Professional. His duties included taking control of the corporate debtor's assets, making a public announcement of the insolvency resolution process, constituting a committee of creditors, and submitting regular progress reports to the Tribunal. The IRP was directed to act in accordance with the Code and maintain high standards of ethics and morality.Conclusion:The Tribunal admitted the application for initiating the insolvency resolution process against the corporate debtor, declared a moratorium, and appointed an IRP with specific duties to manage the affairs of the corporate debtor. The order ensured compliance with the procedural requirements and protected the interests of all parties involved.