Tribunal Admits Corporate Debtor to Insolvency Resolution Process: Moratorium Declared

The Tribunal admitted the Corporate Debtor into Corporate Insolvency Resolution Process after finding the Operational Creditor's application compliant. A moratorium was declared under Section 14 of the Insolvency and Bankruptcy Code, prohibiting actions against the Corporate Debtor. An Interim Resolution Professional was appointed to manage the resolution process, with instructions to protect the Corporate Debtor's assets and oversee operations. The Operational Creditor was directed to make an advance payment for the resolution process. The application for Corporate Insolvency Resolution Process was admitted, and necessary steps were taken to initiate the process.

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Issues:
Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process due to default in paying operational debt.

Detailed Analysis:
The Operational Creditor filed an application against the Corporate Debtor, citing default in paying operational debt of Rs. 11,81,682. The debt arose from goods sold and services rendered between 23.05.2017 to 21.12.2017, with a total outstanding amount of Rs. 69,11,682, of which Rs. 57,30,000 was paid, leaving a balance of Rs. 11,81,682. A notice of demand under Section 8 of the I.B. Code, 2016 was sent on 28.06.2019, but the Corporate Debtor did not pay or raise any dispute. The application proceeded ex-parte as the Corporate Debtor did not appear.

The Tribunal found that the Operational Creditor had produced all relevant invoices and served the notice under Section 8 of the I.B. Code, 2016 to the Corporate Debtor. The date of default was before the COVID-19 lockdown. The Operational Creditor complied with the provisions of Section 9(3)(b) and Section 9(3)(c) by affirming non-receipt of the claim amount and absence of any dispute from the Corporate Debtor. No Insolvency Resolution Professional was suggested by the Operational Creditor, leaving the decision to the authority.

The Tribunal, after verifying the defect-free application, admitted the Corporate Debtor into Corporate Insolvency Resolution Process. A moratorium under Section 14 of the Code was declared, prohibiting certain actions against the Corporate Debtor. Mr. Sachin Bhatbhatt was appointed as the Interim Resolution Professional (IRP) to conduct the resolution process. The IRP was directed to make a public announcement, manage the company's operations, and receive an advance payment of Rs. 50,000 from the Operational Creditor for the resolution process.

The Tribunal ordered the IRP to protect the Corporate Debtor's property value and manage its operations as a going concern. The Operational Creditor was instructed to pay the advance within two weeks. The Registry was directed to communicate the order to all relevant parties and upload it on the website. Consequently, the application was admitted for Corporate Insolvency Resolution Process.

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