Tribunal Admits Insolvency Petition, Appoints Resolution Professional to Address Non-Payment of Operational Debt

The Tribunal admitted the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by an operational creditor against the respondent company for non-payment of operational debt related to advertising services. The Tribunal appointed an Interim Insolvency Resolution Professional, Mr. Kiran C. Shah, and declared a moratorium to facilitate the resolution process. The decision aimed to protect creditors' interests and ensure a structured approach to resolving the corporate debtor's financial obligations.

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Issues:
1. Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by operational creditor.
2. Claim of operational debt due to non-payment by the respondent company.
3. Appointment of Interim Insolvency Resolution Professional and declaration of moratorium.

Issue 1: Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 filed by operational creditor

The applicant, a proprietor of an operational creditor engaged in outdoor advertisement, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The respondent company had taken advertisement spaces for its water park/amusement park and placed orders for advertising hoardings in various locations in Gujarat. Despite repeated demands and issuance of notices, the respondent failed to clear the outstanding amount, leading to the applicant filing the insolvency application. The applicant provided evidence of the debt, including invoices, notices, and bank statements, to support the claim.

Issue 2: Claim of operational debt due to non-payment by the respondent company

The Tribunal found that the respondent had admitted the debt but failed to make payments, with issued cheques being returned due to insufficient funds or closed accounts. The Tribunal determined that the amount claimed by the applicant constituted operational debt under the Code, as it was for services provided to the respondent. The records showed the existence of the debt and default by the respondent, establishing the applicant as an operational creditor entitled to seek resolution under the Code.

Issue 3: Appointment of Interim Insolvency Resolution Professional and declaration of moratorium

The Tribunal, after finding the application complete and the notice received by the respondent, initiated the insolvency resolution process. Mr. Kiran C. Shah was appointed as the Interim Insolvency Resolution Professional. The Tribunal declared a moratorium, prohibiting various actions against the corporate debtor, and directed the Insolvency Resolution Professional to make a public announcement of the initiation of the corporate insolvency process. The order of moratorium was to remain in effect until the completion of the insolvency resolution process or until further orders.

In conclusion, the Tribunal admitted the petition, appointed an Interim Insolvency Resolution Professional, and declared a moratorium to facilitate the resolution of the operational debt issue between the parties. The decision aimed to protect the interests of the creditors and ensure a structured process for resolving the financial obligations of the corporate debtor.

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