2020 (3) TMI 91 - Tri - Insolvency and Bankruptcy

Company Petition Admitted for Insolvency Proceedings: Key Steps and Implications

Bank of India Versus Tara Hospitality (P.) Ltd.

The National Company Law Tribunal, Mumbai, admitted a Company Petition filed by a Financial Creditor under Section 7 of the Insolvency & Bankruptcy ... Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT:- This Petition reveals that there is a debt as defined in section 3(11) of IBC; there is a default within the meaning of section 3(12) of IBC; the application of the Financial Creditor is complete; an amount of more than Rupees One Lakh is due and payable and in default and no disciplinary proceedings are pending against the proposed resolution professional. Therefore, this petition deserves to be admitted - The application made by the Financial Creditor is complete in all respects as required by law, and it clearly shows that the Corporate Debtor has not paid the dues, and this has also been confirmed by the Corporate Debtor. Application admitted - moratorium declared. Issues:- Initiation of Corporate Insolvency Resolution Process under Section 7 of IBC- Default in payment by the Corporate Debtor- Jurisdiction of the Tribunal- Details of credit facilities provided by the Financial Creditor- Particulars of Financial Debt and security arrangements- Non-performing Assets classification and issuance of notices- Failure of the Corporate Debtor to respond to legal proceedings- Admissibility of the Petition and appointment of Interim Resolution Professional- Moratorium under Section 14 of IBC and related provisions- Directions for the CIRP process and management of the Corporate DebtorAnalysis:1. The judgment pertains to a Company Petition filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 by a Financial Creditor seeking to initiate Corporate Insolvency Resolution Process against a Private Company, the Corporate Debtor, which failed to pay a substantial sum, leading to the petition being filed before the National Company Law Tribunal, Mumbai.2. The petition detailed the default in payment by the Corporate Debtor, amounting to over Rupees ten crores, including principal and interest components, with the Financial Creditor providing various credit facilities to the Corporate Debtor, leading to the classification of the account as Non-performing Assets.3. The Financial Creditor presented evidence of the debt owed by the Corporate Debtor, including equitable mortgage deeds, acknowledgment of debts, and notices issued under relevant laws, showcasing the default and subsequent legal actions taken to recover the dues.4. Despite clear directions and opportunities provided to the Corporate Debtor to respond to the legal proceedings, including filing necessary documents and replies, the Corporate Debtor failed to comply, leading to the matter being taken up for admission in a time-bound manner.5. The Tribunal, after considering the complete application by the Financial Creditor, admission of liability by the Corporate Debtor, and the proposal for an Interim Resolution Professional, deemed the petition admissible, leading to the initiation of the Corporate Insolvency Resolution Process and the imposition of a moratorium under Section 14 of the IBC.6. The judgment further outlined detailed directions regarding the moratorium, appointment and functions of the Interim Resolution Professional, management of the Corporate Debtor during the CIRP period, deposit for expenses, communication of orders, and compliance requirements with various authorities, ensuring a structured and legal process for resolution of the financial dispute.