2020 (9) TMI 519 - Tri - Insolvency and Bankruptcy

Tribunal Admits Company Petition for Insolvency, Initiates Resolution Process, Orders Moratorium

The Tribunal admitted the Company Petition under section 7 of the Insolvency & Bankruptcy Code, 2016, initiating Corporate Insolvency Resolution ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC at the relevant time. The Corporate Debtor has unequivocally admitted, through the Board Resolution dated 09.03.2020, that any restructuring of the Corporate Debtor would be best achieved within the four corners of the Insolvency and Bankruptcy Code, 2016. Therefore, the default stands established and there is no reason to deny the admission of the petition. This Adjudicating Authority admits this petition and orders initiation of CIRP against the Corporate Debtor - Petition admitted - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process under section 7 of the Insolvency & Bankruptcy Code, 2016.2. Default in payment by the Corporate Debtor leading to the petition.3. Jurisdiction of the National Company Law Tribunal to hear the petition.4. Admission of the petition and appointment of the Interim Resolution Professional.5. Moratorium under section 14 of the IBC and its implications.6. Duties and responsibilities of the Interim Resolution Professional during the CIRP.Issue 1: Initiation of Corporate Insolvency Resolution ProcessThe Company Petition was filed under section 7 of the Insolvency & Bankruptcy Code, 2016 by a Financial Creditor seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Financial Creditor alleged that the Corporate Debtor failed to make a payment of a specified amount as principal and interest, leading to the petition.Issue 2: Default in PaymentThe Financial Creditor's case detailed the debt default by the Corporate Debtor, stemming from an Optionally Convertible Debenture Agreement. The debt amount, along with interest, remained unpaid despite multiple communications and transfers. The Corporate Debtor admitted the default and expressed an inability to repay the debt, leading to the initiation of insolvency proceedings.Issue 3: Jurisdiction of the TribunalThe Tribunal established its jurisdiction to hear the petition based on the incorporation details of the Corporate Debtor under the Companies Act, 1956, and its registered office within the State of Maharashtra. The petition was filed before the Adjudicating Authority, which had the requisite jurisdiction to deal with the matter.Issue 4: Admission of the Petition and Appointment of IRPAfter considering the submissions and records, the Tribunal found the petition complete and in compliance with the law. The Corporate Debtor admitted the default, acknowledging the necessity of resolution within the IBC framework. Consequently, the Tribunal admitted the petition and ordered the initiation of CIRP against the Corporate Debtor, appointing an Interim Resolution Professional.Issue 5: Moratorium and its ImplicationsThe Tribunal ordered a moratorium under section 14 of the IBC, affecting various actions against the Corporate Debtor's assets and legal proceedings. Essential services to the Corporate Debtor were protected during the moratorium period, subject to certain conditions. The moratorium would remain in effect until the completion of CIRP or other specified events.Issue 6: Duties of the Interim Resolution ProfessionalThe appointed Interim Resolution Professional was tasked with managing the affairs of the Corporate Debtor during the CIRP period, as per the provisions of the IBC. The IRP had specific responsibilities outlined in the order, including submitting progress reports to the Adjudicating Authority and managing the expenses related to public notices and claims.This detailed analysis covers the various issues involved in the legal judgment, outlining the key aspects of the Tribunal's decision and the implications for the parties involved in the insolvency proceedings.