2020 (9) TMI 841 - Tri - Insolvency and Bankruptcy

Public Limited Company Enters Insolvency Resolution Process under IBC

The Tribunal admitted a Public Limited Company's application for Corporate Insolvency Resolution Process under Section 10 of the IBC, 2016, appointing a ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- As per Section 10(4) the Adjudication Authority, can admit an Application if the Application is complete and no disciplinary proceedings are pending against the proposed Resolution Professional. In the instant case, admittedly, the Corporate Applicant has become insolvent by losing its worth having so many claims against it by Financial Creditors and Operational Creditors, as detailed supra. And the instant Company Petition is filed in accordance with law and also suggested a qualified Resolution Professional namely Shri Rakesh Chaturvedi, who has also filed his written Communication in Form-2 dated 10.02.2020, inter-alia declaring that he is a qualified Resolution Professional, he is not serving in any proceedings and there are no disciplinary proceedings pending against him with the Board or Indian Institute of Insolvency Professionals of ICAI. The Shareholders of Applicant Company, in their Extraordinary General Meeting, held on 30.09.2019 passed a Special Resolution by approving to file an Application, U/s 10 of Code by authorising Mr. Sanjay G. Bichu, Managing Director of the Company to take necessary action in the that regard. Accordingly, the instant Application/Petition is filed by seeking to initiate CIRP respect of the Company. Application admitted - moratorium declared. Issues Involved:Initiation of Corporate Insolvency Resolution Process under Section 10 of the IBC, 2016 by a Public Limited Company suffering losses and lacking assets.Detailed Analysis:1. Background and Financial Situation:The case involves a Public Limited Company engaged in producing automobile components facing financial distress due to losses and lack of assets. The Company had taken loans from financial institutions, including State Bank of India, which turned into Non-Performing Assets (NPA). Despite efforts for settlement, the Company faced challenges due to market conditions and demonetization.2. Legal Proceedings and Previous Actions:The Company had previously filed for Corporate Insolvency Resolution Process (CIRP) in 2017, which was withdrawn. The Company settled dues with Operational Creditors but faced actions under the SARFAESI Act leading to the sale of assets. The Company's net worth was eroded as early as 2014, as recorded in BIFR proceedings.3. Application for CIRP and Resolution Professional:The Company filed a fresh application under Section 10 of the IBC, 2016, seeking to initiate CIRP. The application included details of Financial Creditors and Operational Creditors, highlighting the Company's insolvency. A qualified Resolution Professional was suggested, with the necessary approvals obtained from shareholders.4. Adjudication and Decision:The Tribunal examined the application, confirming the Company's insolvency and the completeness of the application. The Tribunal admitted the application for CIRP, appointing a Resolution Professional to oversee the process. A moratorium was declared to protect the Company's assets during the resolution process. The Board of Directors and staff were directed to cooperate with the Resolution Professional.5. Directions and Future Proceedings:The Resolution Professional was instructed to adhere to all provisions of the IBC, 2016, and submit progress reports to the Tribunal. The case was scheduled for a progress report on a specified date, and the Registry was tasked with communicating the order to the appointed Resolution Professional promptly.This detailed analysis outlines the financial distress faced by the Company, the legal proceedings undertaken, the application for CIRP, the Tribunal's decision to admit the application, and the subsequent directions for the resolution process under the IBC, 2016.