2020 (3) TMI 485 - Tri - Insolvency and Bankruptcy

Paper mill faces insolvency proceedings under the Insolvency and Bankruptcy Code

Dena Bank Versus Kanak Pulp & Paper Mills (P.) Ltd.

The National Company Law Tribunal, Cuttack, admitted the bank's application under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating ... Maintainability of Application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and default or not - HELD THAT:- The consideration under Section 7 of Insolvency and Bankruptcy Code, 2016 is whether the Financial Creditor can start Corporate Insolvency Resolution Process of the Corporate Debtor. The applicant has established that the loan amount was given and availed by the Corporate Debtor and there is an outstanding of ₹ 13.41 Crores due and payable by the Corporate Debtor and the Corporate Debtor has committed default in repayment of the amount. The debt and the default are proved. The application is admitted - moratorium is declared. Issues:Initiation of Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016.Analysis:1. The applicant, a bank, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, a paper mill company. The Corporate Debtor had availed financial facilities from the bank but failed to repay the loan, leading to it being declared a non-performing asset.2. The application was transferred to the National Company Law Tribunal, Cuttack, and the Corporate Debtor was duly served notice through various means, including publication in newspapers, due to insufficient address details. As the Corporate Debtor did not respond, the matter proceeded ex parte.3. The applicant provided evidence of the loans granted to the Corporate Debtor, totaling Rs. 13.41 Crores, secured by hypothecation of movables and mortgage of immovables. The debt and default were established, indicating a valid claim under the Insolvency and Bankruptcy Code, 2016.4. The Tribunal, after reviewing the documents and records, concluded that the Financial Creditor had met the requirements under Section 7 of the Code. Therefore, the application for initiating Corporate Insolvency Resolution Process against the Corporate Debtor was admitted.5. Consequently, a moratorium was declared, and a public announcement was ordered in accordance with the relevant sections of the Insolvency and Bankruptcy Code, 2016. The moratorium prohibited various actions against the Corporate Debtor, and essential supplies were to continue during this period.6. An Interim Resolution Professional was appointed to manage the affairs of the Corporate Debtor, ascertain creditors, convene a Committee of Creditors, and oversee the resolution process. The Resolution Professional was directed to convene a meeting of the Committee of Creditors within a specified timeframe.7. The Registry was instructed to communicate the Order to all relevant parties, and the Interim Resolution Professional was required to file a Progress Report by a specified date. The Tribunal directed the issuance of a certified copy of the order to concerned parties upon compliance with formalities.8. The Tribunal's decision to admit the application marked the beginning of the Corporate Insolvency Resolution Process for the Corporate Debtor, with detailed provisions and timelines outlined for the resolution proceedings.This summary provides a comprehensive analysis of the legal judgment regarding the initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016, by the National Company Law Tribunal, Cuttack.