Financial debt default proof under the insolvency code led to admission and commencement of corporate insolvency resolution process.

A section 7 insolvency application under the Insolvency and Bankruptcy Code was found maintainable on documentary proof of financial debt and default, supported by loan, security and account records. The Tribunal held that default was established from 30/09/2015, the claim met the statutory threshold, and the filing was within limitation on the basis of the last payment dated 26/02/2016. Service on the corporate debtor was completed, the petition was procedurally complete, and pending SARFAESI and DRT proceedings did not bar initiation of corporate insolvency resolution process. The application was admitted and CIRP was directed to commence, with the proposed insolvency professional appointed as interim resolution professional.

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Issues: Whether the petition under section 7 of the Insolvency and Bankruptcy Code, 2016 was maintainable and deserved admission on proof of financial debt, default, limitation and procedural completeness.

Analysis: The application was supported by loan sanction documents, hypothecation deeds, mortgage documents, guarantees, statement of account and a bankers' certificate. The account had been classified as non-performing asset and the record showed default from 30/09/2015. The Tribunal found that the debt exceeded the statutory threshold, the petition had been filed within limitation on the basis of the last payment dated 26/02/2016, and service on the corporate debtor had been effected. The pendency of SARFAESI and DRT proceedings was not treated as a bar to initiation of corporate insolvency resolution process. The application was also found complete in the prescribed form and the proposed insolvency professional was accepted as interim resolution professional.

Conclusion: The petition under section 7 was admitted and corporate insolvency resolution process was directed to commence against the corporate debtor.

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