2020 (9) TMI 1112 - Tri - Insolvency and Bankruptcy

Tribunal admits application under IBC, CIRP initiated against Corporate Debtor for debt/default

Learning Candid India Pvt. Ltd. Versus Alfa People IT Services Pvt. Ltd.

The tribunal admitted the application under Section 7 of the IBC, 2016, and initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate ... 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 debt and default in question are not in dispute and on the other hand, the Corporate Debtor has also accepted the debt, and the Respondent is prima facie found to be insolvent. The instant application is filed strictly in accordance with the extant provisions of the Code, and debt and default established and also suggested a qualified Resolution Professional namely Shri Surender Devasani, with Registration No. IBBI/IPA-001/IP-P00775/2017-2018/11348, who also filed written Consent in Form-2 on 26.08.2019, by inter alia declaring that no disciplinary proceedings pending against him with the Board or the Indian Institute of Insolvency. Therefore, he is provisionally eligible to be appointed as IRP. Application admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.2. Existence of financial debt and default.3. Compliance with Section 186 of the Companies Act, 2013.4. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium.Detailed Analysis:1. Initiation of CIRP under Section 7 of IBC, 2016:The petitioner, M/s. Learning Candid India Private Limited, filed an application under Section 7 of the IBC, 2016, seeking to initiate CIRP against M/s. AlfaPeople IT Services Private Limited for a default amount of Rs. 12,98,467. The application was filed in accordance with Rule 4 of the I&B (Application to Adjudicating Authority) Rules, 2016.2. Existence of Financial Debt and Default:The petitioner extended a loan of Rs. 30,00,000 to the respondent under an Inter-Corporate Loan Agreement dated 09.02.2017, with an interest rate of 18% per annum, payable quarterly. Despite partial repayments, the respondent failed to repay the entire loan amount along with interest. The petitioner issued multiple request letters for repayment, to which the respondent acknowledged their inability to repay due to financial exigencies. The debt falls under the definition of 'Financial Debt' as per Section 5(8) of the IBC, 2016. The Corporate Debtor accepted the debt and default in their Memo of Submission dated 09.01.2020, citing financial setbacks and recession as reasons for non-payment.3. Compliance with Section 186 of the Companies Act, 2013:The loan was extended in compliance with Section 186 of the Companies Act, 2013, which allows a company to give loans exceeding certain thresholds with prior approval through a special resolution. The petitioner passed the requisite special resolution in an Extra-Ordinary General Meeting held on 07.02.2017. The Corporate Debtor is not a related party to the Financial Creditor, and the transaction does not fall under Related Party Transactions as per Section 188 of the Companies Act, 2013.4. Appointment of IRP and Declaration of Moratorium:The petitioner proposed Shri Surender Devasani as the Interim Resolution Professional (IRP), who provided written consent and necessary declarations. The tribunal admitted the application and initiated CIRP against the Corporate Debtor. The tribunal declared a moratorium prohibiting:- Institution or continuation of suits or proceedings against the Corporate Debtor.- Transfer, encumbrance, or disposal of assets by the Corporate Debtor.- Foreclosure or enforcement of security interests.- Recovery of property occupied by the Corporate Debtor.- Termination or suspension of essential goods or services to the Corporate Debtor during the moratorium period.The IRP was directed to follow all provisions of the IBC, 2016, and submit progress reports to the Adjudicating Authority. The Board of Directors and staff of the Corporate Debtor were instructed to cooperate with the IRP.Conclusion:The tribunal, satisfied with the existence of debt and default, admitted the application under Section 7 of the IBC, 2016, and initiated CIRP against the Corporate Debtor. Shri Surender Devasani was appointed as the IRP, and a moratorium was declared to facilitate the resolution process. The case was posted for the IRP's report on 11.03.2020.