Tribunal Admits Insolvency Application: Corporate Debtor Default Established

The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, finding the Financial Creditor's evidence sufficient to establish the Corporate Debtor's default in loan repayment. Consequently, a moratorium was declared, and the Corporate Insolvency Resolution Process was initiated, appointing an Interim Resolution Professional. The Tribunal outlined the moratorium's implications, directed the convening of a Creditors' Committee meeting, and set timelines for identifying a Resolution Applicant. The Financial Creditor was instructed to pay fees and comply with formalities for order dissemination.

---

---

Issues:
Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against a Corporate Debtor due to default in loan repayment.

Analysis:
The Financial Creditor filed an application under Section 7 of the I & B Code against the Corporate Debtor, alleging default in repaying a loan amount of Rs. 3,55,89,295 as per the Sanction Letter dated 25.10.2008. The Corporate Debtor's account was classified as a non-performing asset in 2011, leading to subsequent legal actions. The Financial Creditor sent multiple demand notices, including under the SARFAESI Act, 2002, but the Corporate Debtor failed to repay the outstanding amount, prompting the current insolvency application.

The Financial Creditor submitted various documents as evidence, including the Sanction Letter, loan agreements, CIBIL extract, account statements, and demand notices. The application also proposed an Interim Resolution Professional. The Financial Creditor argued that the Corporate Debtor's default was proven through these documents and compliance with legal requirements, leading to the application's validity.

Despite the Corporate Debtor's absence in contesting the petition, the Tribunal found the Financial Creditor's evidence sufficient to establish default and compliance with Section 7(3) of the I & B Code. Consequently, the application was admitted, declaring a moratorium and initiating the Corporate Insolvency Resolution Process. The Tribunal appointed an Interim Resolution Professional and outlined the moratorium's implications, including restrictions on legal actions against the Corporate Debtor and the continuation of essential services.

The order mandated the Interim Resolution Professional to convene a Creditors' Committee meeting and identify a Resolution Applicant within a specified timeline. The Tribunal directed the registry to communicate the order to all relevant parties and set a date for a progress report filing. Additionally, the Financial Creditor was instructed to pay the Interim Resolution Professional's fees and comply with formalities for issuing certified copies of the order to concerned parties.

---