IBC: Court Admits Application for Corporate Insolvency Resolution Process

The court admitted the application under Section 9(5) of the IBC, 2016, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor. The Tribunal declared a moratorium and appointed an Interim Resolution Professional, ensuring compliance with procedural requirements under the Insolvency and Bankruptcy Code.

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Issues Involved:
1. Existence of Operational Debt and Default
2. Admissibility of the Petition under Section 9 of IBC, 2016
3. Appointment of Interim Resolution Professional (IRP)
4. Declaration of Moratorium
5. Compliance with Procedural Requirements

Detailed Analysis:

1. Existence of Operational Debt and Default:
The Operational Creditor, a leading deep freezer manufacturer, supplied 182 deep freezers to the Corporate Debtor based on several purchase orders dated February and March 2017. The Corporate Debtor issued multiple post-dated cheques, many of which were dishonored with the endorsement "Payment Stopped by Drawer." Despite multiple accommodations and follow-ups, the Corporate Debtor failed to clear the outstanding debt of Rs. 21,00,000/-. The Corporate Debtor's emails and issuance of further post-dated cheques indicated an acknowledgment of the debt but cited fund constraints for non-payment.

2. Admissibility of the Petition under Section 9 of IBC, 2016:
The Operational Creditor filed the application under Section 9 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Tribunal noted that the claim was within the prescribed limitation period of three years and that the Corporate Debtor had not filed any reply despite multiple opportunities, implying an admission of liability. The Tribunal found sufficient grounds to admit the petition based on the existence of operational debt and default.

3. Appointment of Interim Resolution Professional (IRP):
Since the Operational Creditor did not propose an IRP, the Tribunal appointed Mr. Asir Raja Selvan as the Interim Resolution Professional from the list furnished by the Insolvency and Bankruptcy Board of India (IBBI), subject to the condition that no disciplinary proceedings were pending against him and required disclosures were made within one week.

4. Declaration of Moratorium:
Upon admitting the application, the Tribunal declared a moratorium as per Section 14(1) of the IBC, 2016, which included:
- Suspension of all suits or proceedings against the Corporate Debtor.
- Prohibition on transferring or disposing of any assets of the Corporate Debtor.
- Prohibition on foreclosing or enforcing any security interest.
- Prohibition on recovery of any property by an owner or lessor.
The moratorium would remain effective until the completion of the CIRP or until an order for liquidation or approval of a resolution plan was passed.

5. Compliance with Procedural Requirements:
The Tribunal directed the Operational Creditor to pay Rs. 2,00,000 to the IRP for expenses. The Registry was instructed to communicate the order to the Operational Creditor, Corporate Debtor, IBBI, and the Registrar of Companies. The IRP was also required to file a declaration form as per the regulations.

Conclusion:
The application was admitted under Section 9(5) of the IBC, 2016, initiating the CIRP against the Corporate Debtor. The Tribunal's order included the declaration of a moratorium and the appointment of an IRP, ensuring compliance with the procedural requirements of the Insolvency and Bankruptcy Code.

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