Operational Creditor Granted Insolvency Relief for Unpaid Invoices

The petition under Section 9 of the Insolvency & Bankruptcy Code, 2016 was filed by an Operational Creditor against a Corporate Debtor for unpaid invoices totaling &8377; 6,39,817.3. Despite the service of a demand notice and the Corporate Debtor's non-appearance, the Tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process. An ex-parte order was issued in favor of the Operational Creditor, imposing a moratorium under Section 14 of the Code to protect essential goods/services supply and prevent legal actions against the Corporate Debtor. An Insolvency Professional was appointed, and the Operational Creditor was directed to deposit funds for immediate expenses.

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Issues:
Petition under Section 9 of the Insolvency & Bankruptcy Code, 2016 for unpaid invoices leading to Corporate Insolvency Resolution Process initiation.

Analysis:
The petitioner, an Operational Creditor, entered a Merchant Agreement with the respondent, a Corporate Debtor, for logistics services. Despite full payment for one invoice and partial payments for two others, four invoices remain unpaid, totaling &8377; 6,39,817.3. The Operational Creditor issued a demand notice as per Section 8 of the Code, which was duly served. Due to the Corporate Debtor's failure to settle the outstanding amount, the petition for Corporate Insolvency Resolution Process initiation was filed, supported by affidavits under Section 9(3)(b) and 9(3)(c) of the Code.

The Corporate Debtor was served but did not appear, leading to an ex-parte order in favor of the Operational Creditor. The Tribunal admitted the petition, imposing a moratorium under Section 14 of the Code. This moratorium prevents legal actions against the Corporate Debtor, asset disposal, security interest enforcement, and property recovery. Essential goods/services supply to the Corporate Debtor is protected during this period, subject to government notifications. The moratorium remains in effect until the completion of the insolvency resolution process.

An Insolvency Professional (IRP) was appointed, and the Operational Creditor was directed to deposit &8377; 2 lakhs for immediate IRP expenses, to be reimbursed as CIR costs. The IRP is tasked with Code compliance and report submission. The order was to be shared with both parties and the IRP for further proceedings.

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