Insolvency Petition Admitted Against Corporate Debtor for Loan Default | Resolution Process Guidelines

The National Company Law Tribunal, Ahmedabad, admitted the Insolvency Petition filed by a Financial Creditor against a Corporate Debtor for defaulting on a loan repayment of Rs. 15,00,000. The Court appointed an Interim Resolution Professional and declared a moratorium under the Insolvency and Bankruptcy Code, prohibiting actions against the Corporate Debtor until the completion of the resolution process. The judgment provided detailed guidance on initiating insolvency proceedings and managing defaults, ensuring compliance with the Code's provisions.

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Issues:
1. Initiation of Corporate-Insolvency-Resolution-Process under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Default in repayment of loan by the Corporate Debtor.
3. Appointment of Interim Resolution Professional.
4. Declaration of moratorium under sections 13 and 14 of the Insolvency and Bankruptcy Code.

Issue 1: Initiation of Corporate-Insolvency-Resolution-Process
The Financial Creditor, a private limited company, filed an Insolvency Petition against the Corporate Debtor for defaulting on a loan repayment of Rs. 15,00,000. The loan was due on 25.09.2017, and the default occurred on 26.09.2017. The Petition was filed within the limitation period on 17.01.2019. The Court directed proper notice serving to the Respondent and publication in a local newspaper. The Respondent did not object, and the Court found the Petition maintainable. The Court admitted the Petition on 04.12.2019.

Issue 2: Default in Repayment of Loan
The Financial Creditor provided an interest-free loan to the Corporate Debtor, which was not repaid as per the agreed terms. The loan amount of Rs. 15,00,000 was transferred to the Corporate Debtor's account on 26.09.2015. The Corporate Debtor failed to repay the loan by 25.09.2017, leading to a default. The Court established the default and found the Petition complete for admission.

Issue 3: Appointment of Interim Resolution Professional
The Financial Creditor proposed Mr. Gordhan Ratnabhai Godhani as the Interim Resolution Professional (IRP), who expressed willingness to take charge if the Petition was admitted. Since the Corporate Debtor did not object and no adverse material was found, the Court appointed Mr. Godhani as the IRP. The IRP was directed to announce a moratorium and act as per the provisions of the Insolvency and Bankruptcy Code.

Issue 4: Declaration of Moratorium
The Court declared a moratorium prohibiting various actions against the Corporate Debtor, including suits, asset transfers, and recovery proceedings. Essential goods or services supply to the Corporate Debtor was to continue during the moratorium. The moratorium would remain in effect until the completion of the Corporate Insolvency Resolution Process. The IRP was instructed to adhere to the time limits and duties specified under the Code.

This detailed judgment by the National Company Law Tribunal, Ahmedabad, addressed the issues of initiating insolvency proceedings, default in loan repayment, appointment of an Interim Resolution Professional, and the declaration of a moratorium under the Insolvency and Bankruptcy Code, providing a comprehensive analysis and direction for the resolution process.

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