2021 (3) TMI 870 - Tri - Insolvency and Bankruptcy

Tribunal admits Insolvency Application against Corporate Debtor for non-payment of debt.

M/s. AFCO Energy Pte Limited Versus M/s. Kiran Global Chem Limited

The Tribunal admitted the Insolvency and Bankruptcy Application filed by the Operational Creditor against the Corporate Debtor under Section 9 of the ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to pay its dues - debt due and payable or not - time limitation - HELD THAT:- This Bench is inclined to admit this Application as the Applicant has made out a case and also satisfied this Adjudicating Authority for admitting this Application. It is also proved that there is a debt due and payable by the Corporate Debtor and they have defaulted in making a payment as per the agreement dated 26.04.2019. The Corporate Debtor prayed to this Tribunal to keep this application in abeyance for a period 6 months, this is not valid ground for keeping in abeyance this Application for long period. Application admitted - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016.2. Default in payment by the Corporate Debtor to the Operational Creditor.3. Settlement agreement between the Operational Creditor and the Corporate Debtor.4. Breach of settlement agreement by the Corporate Debtor.5. Appointment of Interim Resolution Professional and declaration of moratorium.Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016:The case involved an Insolvency and Bankruptcy Application filed by an Operational Creditor against a Corporate Debtor under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor claimed that the Corporate Debtor failed to pay a significant amount, leading to the initiation of Corporate Insolvency Resolution Process. The Tribunal examined the details of the application, the nature of the debt, and the legal provisions under the IB Code, 2016 to determine the validity of the claim.Issue 2: Default in payment by the Corporate Debtor to the Operational Creditor:The Operational Creditor alleged that the Corporate Debtor failed to make payments for supplied chemicals as per the agreed terms, leading to a substantial outstanding debt. Despite certain part payments and settlement proposals, the Corporate Debtor was accused of persistent default in honoring the payment obligations. The Tribunal reviewed the timeline of payments, demand notices, and the admitted debt amount to assess the default committed by the Corporate Debtor.Issue 3: Settlement agreement between the Operational Creditor and the Corporate Debtor:A settlement agreement was reached between the Operational Creditor and the Corporate Debtor, outlining specific terms for repayment of the outstanding dues. However, the Corporate Debtor breached the settlement agreement by failing to make payments as per the agreed schedule. The Tribunal scrutinized the terms of the settlement, the breach by the Corporate Debtor, and the subsequent actions taken by the Operational Creditor, including issuing fresh demand notices.Issue 4: Breach of settlement agreement by the Corporate Debtor:The Corporate Debtor was found to have breached the settlement agreement by failing to make payments as per the agreed schedule, leading to a breakdown in the settlement terms. Despite partial payments and promises for future payments, the Corporate Debtor's consistent default prompted the Operational Creditor to seek legal recourse through the Insolvency and Bankruptcy Code. The Tribunal examined the breach of the settlement agreement, the reasons cited by the Corporate Debtor, and the responses provided by both parties.Issue 5: Appointment of Interim Resolution Professional and declaration of moratorium:Following a thorough review of the case, the Tribunal admitted the application and appointed an Interim Resolution Professional to oversee the Corporate Insolvency Resolution Process. The Tribunal also declared a moratorium, prohibiting certain actions against the Corporate Debtor and ensuring the continuity of essential goods or services. The order of moratorium was specified to remain in effect until the completion of the insolvency resolution process or the approval of a resolution plan. The Tribunal directed the immediate communication of the order to all relevant parties.This detailed analysis of the judgment highlights the legal complexities involved in the case, including debt defaults, settlement agreements, and the procedural aspects of initiating insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.