Bench admits Insolvency Application under section 7, appoints IRP for Corporate Debtor. The Bench admitted the Insolvency and Bankruptcy Application under section 7 of the Insolvency and Bankruptcy Code, 2016, appointing an Interim Resolution ...
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Bench admits Insolvency Application under section 7, appoints IRP for Corporate Debtor.
The Bench admitted the Insolvency and Bankruptcy Application under section 7 of the Insolvency and Bankruptcy Code, 2016, appointing an Interim Resolution Professional (IRP) due to the Corporate Debtor's failure to repay the debt to the Financial Creditor. The Court found evidence of debt and default, leading to the initiation of the Corporate Insolvency Resolution Process (CIRP). Specific directions were issued, including a moratorium on actions against the Corporate Debtor, continuation of essential supplies, and appointment of an IRP until the constitution of the Committee of Creditors (CoC).
Issues: Insolvency and Bankruptcy Application u/s 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor.
Analysis: The Financial Creditor filed an Insolvency and Bankruptcy Application under section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for defaulting in repayment. The Financial Creditor, a home buyer, claimed that the debt falls under the definition of Financial Debt as per the Code. The Construction Agreement between the Financial Creditor and the Corporate Debtor specified completion within 36 months. The Corporate Debtor admitted receiving an advance payment but failed to adhere to the agreement's terms by not delivering the constructed apartment within the agreed time frame. Despite several opportunities, the Corporate Debtor did not repay the dues, leading the Financial Creditor to approach the adjudicating authority.
The Financial Creditor provided various documents to establish the debt and default, including the Construction Agreement, payment receipts, and the Corporate Debtor's financial statements. The Bench found that the Financial Creditor successfully proved the existence of debt and default. The Corporate Debtor's absence during multiple hearings indicated a lack of willingness to repay the outstanding dues. Consequently, the Bench decided to admit the Insolvency and Bankruptcy Application, appointing an Interim Resolution Professional (IRP) based on the Financial Creditor's consent to cover the IRP's remuneration and expenses until the constitution of the Committee of Creditors (CoC).
The judgment included specific directions following the admission of the application. It declared a moratorium prohibiting certain actions against the Corporate Debtor, ensured the continuation of essential supplies, and specified the effect of the moratorium until the completion of the insolvency resolution process. Additionally, the judgment appointed a specific IRP and directed the Registry to communicate the order promptly to the relevant parties.
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