Company Petition Filed Against Corporate Debtor for Default: Insolvency Proceedings Initiated

The Financial Creditor filed a Company Petition against the Corporate Debtor for defaulting on a substantial amount, leading to the initiation of Corporate Insolvency Resolution Process. Despite the Corporate Debtor's objections, evidence of default was found, and the petition was admitted. An Interim Resolution Professional was appointed to manage the Corporate Debtor's affairs, and a moratorium was declared to protect its assets. The IRP was tasked with ensuring compliance with the Insolvency and Bankruptcy Code, safeguarding the Corporate Debtor's property, and maintaining essential services. Directors and promoters were directed to cooperate with the IRP, and relevant parties were informed to ensure compliance with the Code.

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Issues:
Initiation of Corporate Insolvency Resolution Process based on default in repayment by Corporate Debtor.

Analysis:
The Financial Creditor filed a Company Petition against the Corporate Debtor for defaulting on a substantial amount. The Financial Creditor, an Asset Reconstruction Company, acquired rights from UCO Bank through an assignment agreement. The Corporate Debtor availed credit facilities under the UCO Rent Scheme, with the Financial Creditor holding securities valued at Rs. 26.77 crores. The Corporate Debtor defaulted, leading to the loan being classified as a Non-Performing Asset (NPA) since 2011. The Financial Creditor sent a Demand Notice under the SARFAESI Act, leading to symbolic possession of mortgaged property.

The Corporate Debtor claimed a restructured liability, but the Financial Creditor cancelled the restructuring due to continuous defaults. The Financial Creditor established the outstanding debt and default through various agreements. Despite the Corporate Debtor's objections and claims of payments made, the Tribunal found evidence of default and admitted the petition. Mr. Pankaj Shrivastav was appointed as the Interim Resolution Professional (IRP) to manage the Corporate Debtor's affairs. A moratorium was declared, prohibiting legal actions against the Corporate Debtor and preserving its assets.

The IRP was directed to comply with the provisions of the Insolvency and Bankruptcy Code, protect the Corporate Debtor's property, and ensure essential services continued. The directors and promoters were instructed to cooperate with the IRP. The Registry was tasked with communicating the order to relevant parties, ensuring compliance with the Code. The details of the appointed Insolvency Resolution Professional were provided for communication and further actions.

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