Tribunal Admits CIRP Application Against AB Garments Impex LLP for Payment Default

The Tribunal admitted the application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. AB Garments Impex LLP, due to default in payment of Rs. 7,00,355/- with interest at 18% per annum. The Operational Creditor successfully proved the default through evidence of goods supplied, unpaid invoices, and non-response from the Corporate Debtor. The Tribunal granted the Operational Creditor's claim for interest and imposed a moratorium under section 14 of the Insolvency & Bankruptcy Code, 2016. An Interim Resolution Professional was appointed, and the Operational Creditor was directed to deposit funds for initial CIRP expenses.

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Issues:
Initiating Corporate Insolvency Resolution Process under section 9 of the Insolvency & Bankruptcy Code, 2016 for default in payment.

Analysis:
The Tribunal, upon considering the application filed by the Operational Creditor, admitted the case for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. AB Garments Impex LLP. The Operational Creditor alleged that the Corporate Debtor defaulted in payment of Rs. 7,00,355/- with interest at 18% per annum. The Operational Creditor had supplied goods to the Corporate Debtor as per invoices totaling Rs. 7,50,237/-, out of which only Rs. 50,000/- was paid by the Corporate Debtor. Despite repeated demands and issuance of a demand notice under section 8(1) of the Code, the Corporate Debtor failed to clear the outstanding amount.

The Tribunal noted that the Operational Creditor had successfully proven the default in payment by providing evidence of the goods supplied, invoices issued, and non-payment by the Corporate Debtor. The demand notice under section 8(1) was duly served to the Corporate Debtor via email, and the Corporate Debtor did not respond or defend the case. The Tribunal found that the Operational Creditor was entitled to claim interest at 18% per annum as per the invoices.

In compliance with the provisions of the Code, the Operational Creditor submitted an affidavit and the statement of the Bank account to demonstrate that the unpaid amount remained outstanding despite the demand. The Tribunal, after thorough consideration of the facts and evidence presented, admitted the application for initiating the CIRP against the Corporate Debtor. The Tribunal declared a moratorium under section 14 of the Insolvency & Bankruptcy Code, 2016, prohibiting certain actions against the Corporate Debtor and appointed an Interim Resolution Professional to manage the process. The Operational Creditor was directed to deposit a specified amount in the ESCROW Account for meeting preliminary expenses related to the CIR Process. The Tribunal scheduled a follow-up date for filing the progress report and directed the Registry to communicate the order to all relevant parties.

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