Tribunal rules in favor of operational creditor in insolvency application

The Tribunal found in favor of the applicant, an operational creditor, in an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, against the respondent company, a corporate debtor. The Tribunal determined the existence of operational debt, the debt's due and payable status, and the absence of a dispute, appointing an Interim Insolvency Professional to oversee the Insolvency Resolution Process. A moratorium was declared to protect the corporate debtor from legal actions, asset transfers, and property recovery, ensuring the continuity of essential services until the resolution process's completion.

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Issues Involved:
Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 to trigger Insolvency Resolution Process against a corporate debtor.

Analysis:
1. The applicant, an operational creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Insolvency Resolution Process against the respondent company, a corporate debtor.

2. The applicant, an employee of the respondent company, provided details of outstanding salary from May 2017 to December 2018, along with supporting documents, including a demand notice, appointment letter, and correspondence between the parties.

3. The respondent company, through its authorized representative, admitted the inability to pay the outstanding salary due to the company's non-operational status following the promoter's arrest and subsequent release on bail.

4. The Tribunal examined the criteria under Section 9 of the Code to determine the existence of operational debt, the due and payable status of the debt, and the absence of a dispute between the parties regarding the debt.

5. Referring to the legislative guide on Insolvency Law, the Tribunal assessed whether the debt was subject to a legitimate dispute or set off, emphasizing the need to establish the debt's existence and default occurrence.

6. Based on the material on record, including the acknowledgment of debt by the respondent and the absence of a dispute, the Tribunal concluded that the applicant was an Operational Creditor under the Code, and the debt was due and payable.

7. The Tribunal found the application complete and appointed an Interim Insolvency Professional to oversee the Insolvency Resolution Process, as per the provisions of the Code.

8. The Tribunal declared a moratorium to prohibit legal actions against the corporate debtor, asset transfers, enforcement of security interests, and property recovery during the Insolvency Resolution Process.

9. The order of moratorium also ensured the continuity of essential services to the corporate debtor and specified the effective period until the completion of the resolution process or liquidation approval.

10. The Tribunal disposed of the petition, communicating the order to all relevant parties involved, including the Applicant, Financial Creditor, Corporate Debtor, and the Interim Insolvency Resolution Professional.

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