Corporate Debtor in Mumbai faces insolvency proceedings under the Insolvency & Bankruptcy Code

The National Company Law Tribunal, Mumbai Bench, admitted a petition under section 7 of the Insolvency & Bankruptcy Code, 2016, filed by a Financial Creditor against a Corporate Debtor for default in repayment. The Corporate Debtor admitted its inability to service the debt, leading to the appointment of an Interim Resolution Professional. The Tribunal declared a moratorium under section 14 of the Code, prohibiting actions against the Debtor and appointing the Professional. The moratorium would remain in effect until the completion of the insolvency resolution process or liquidation.

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Issues:
1. Initiation of Corporate Insolvency Resolution Process under section 7 of Insolvency & Bankruptcy Code, 2016.
2. Default in repayment of principal amount and interest by the Corporate Debtor.
3. Admittance of debt and inability to service it by the Corporate Debtor.
4. Appointment of Interim Resolution Professional.
5. Declaration of moratorium and consequential directions.

Analysis:

Issue 1: Initiation of Corporate Insolvency Resolution Process under section 7 of Insolvency & Bankruptcy Code, 2016.
The petition CP 4733/2018 was filed by ICICI Prudential Real Estate AIF I, a Financial Creditor, against Sunshine Housing & Infrastructure Private Limited, the Corporate Debtor, for default in repayment of the principal amount and interest. The petition was filed on 21.12.2018 under section 7 of the Insolvency & Bankruptcy Code, 2016. The Petitioner provided a statement showing the calculation of the amount due and payable as on the filing date.

Issue 2: Default in repayment of principal amount and interest by the Corporate Debtor.
The Petitioner invested a substantial amount in debentures of the Corporate Debtor, which was secured by Deeds of Guarantee and a mortgage. Despite sending a notice to the Corporate Debtor about the default, the Corporate Debtor admitted its inability to service the debt due to financial difficulty. The Corporate Debtor filed an Affidavit stating its incapacity to pay the interest or principal amount.

Issue 3: Admittance of debt and inability to service it by the Corporate Debtor.
The Corporate Debtor admitted the debt and its inability to service it in the Affidavit filed on 10.4.2019. The Corporate Debtor acknowledged the financial difficulty and lack of funds to fulfill the payment obligations towards the Petitioner.

Issue 4: Appointment of Interim Resolution Professional.
The Petitioner proposed the name of Mr. Rajendra M. Ganatra, a registered insolvency resolution professional, for appointment as the Interim Resolution Professional. The Bench found the application under section 7 of the I&B Code, 2016 to be complete, with proof of financial debt against the Corporate Debtor and its default. Consequently, the petition for the initiation of the corporate insolvency resolution process was admitted.

Issue 5: Declaration of moratorium and consequential directions.
The Bench admitted the petition and declared a moratorium under section 14 of the I&B Code. The order prohibited various actions against the Corporate Debtor, ensured the supply of essential goods or services, and appointed the Interim Resolution Professional. The moratorium would be in effect until the completion of the corporate insolvency resolution process or liquidation, as approved by the Bench.

This detailed analysis outlines the legal proceedings, facts, and outcomes of the judgment delivered by the National Company Law Tribunal, Mumbai Bench, in the case involving the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor.

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