2019 (7) TMI 1302 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application, Appoints Interim Professional, Declares Moratorium

Bank of India, Surat Mid-Corporate Branch Versus Kaneria Granito Limited

The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, appointed CA Vineeta Maheshwari as the Interim Resolution ... Admissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - default in repayment of amount - HELD THAT:- It is evident that the default has occurred, which meets the requirement of Section 3(11) and (12) of the I & Code to trigger the CIRP in respect of the Corporate Debtor company - it is established that there is default of debts which comes to Rs.l47,04,98,496.01ps. Hence, the present application can be considered for its Admission. Petition admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.2. Financial assistance and default by the Corporate Debtor.3. Restructuring of debt and non-payment.4. Application completeness and limitation period.5. Appointment of Interim Resolution Professional (IRP).6. Moratorium and its implications.7. Duties and responsibilities of the IRP.Detailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016:The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor.2. Financial Assistance and Default by the Corporate Debtor:The Corporate Debtor had approached the Petitioner-Financial Creditor for financial assistance for purchasing machinery and working capital for its business. Various credit facilities were sanctioned and enhanced over the years. The Corporate Debtor executed several security documents to secure these facilities. However, the Corporate Debtor was irregular in repaying the installments, leading to the accounts being categorized as Non-Performing Assets (NPA).3. Restructuring of Debt and Non-Payment:To avoid NPA classification, the Corporate Debtor requested restructuring of the debt under the CDR system, which was approved by the Petitioner Bank. Despite restructuring, the Corporate Debtor failed to make regular repayments as per the terms of the loan agreements. The Petitioner-Financial Creditor filed an Original Application before the Debt Recovery Tribunal for recovery of the outstanding amount.4. Application Completeness and Limitation Period:The Petitioner-Financial Creditor enclosed a copy of the Revival Letter signed by the Corporate Debtor, which extended the limitation period for filing the Insolvency Petition. The Tribunal found the application to be complete and filed within the limitation period.5. Appointment of Interim Resolution Professional (IRP):The Financial Creditor proposed the name of CA Vineeta Maheshwari as the Interim Resolution Professional. The Tribunal found that the proposed IRP met the requirements of Section 7(3)(b) of the Code and there were no disciplinary proceedings pending against her.6. Moratorium and Its Implications:Upon admission of the application, the Tribunal declared a moratorium under Section 14 of the Code, prohibiting the institution or continuation of suits, execution of judgments, transferring or disposing of assets, and recovery actions against the Corporate Debtor. The supply of essential goods or services to the Corporate Debtor was not to be terminated during the moratorium period.7. Duties and Responsibilities of the IRP:The IRP was directed to make a public announcement of the CIRP, call for the submission of claims, and perform duties as per Sections 17, 18, 20, and 21 of the Code. The personnel connected with the Corporate Debtor were legally obligated to extend cooperation to the IRP. The IRP was also tasked with protecting and preserving the value of the Corporate Debtor's property and managing its operations as a going concern.Conclusion:The Tribunal admitted the application under Section 7 of the I&B Code, appointed CA Vineeta Maheshwari as the Interim Resolution Professional, and declared a moratorium. The Tribunal directed the Registry to communicate the order to relevant parties and authorities. The CP (IB) No.320/7/NCLT/AHM/2018 was admitted with no order as to costs.