Adjudicating Authority Upholds Insolvency Application, Declares Moratorium

The Adjudicating Authority, in a case involving an operational creditor and a corporate debtor, found the application complete with supporting documents, confirmed the default in payment, and established the debt under Section 9 of The Insolvency and Bankruptcy Code, 2016. Following the Mobilox case precedent, the Authority declared a moratorium, appointed an Interim Resolution Professional, and directed the operational creditor to provide funds for the resolution process. The order prohibited legal actions against the debtor, asset alienation, and ensured the continuity of essential services, with instructions to the Registrar of Companies to avoid striking off the debtor's name during the insolvency resolution process.

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Issues:
1. Application under Section 9 of The Insolvency and Bankruptcy Code, 2016 by operational creditor against corporate debtor.
2. Default in payment of operational debt by the corporate debtor.
3. Adjudication of the application and declaration of moratorium.

Analysis:
1. The operational creditor, a logistics service provider, filed a petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 against the corporate debtor, a private limited company, for non-payment of operational debt amounting to Rs. 13,51,214. The applicant provided services for international freight forwarding and raised invoices, to which the respondent made partial payments, leading to outstanding debt.
2. Despite numerous attempts to recover the debt, including a Memorandum of Understanding for payment, the corporate debtor failed to settle the outstanding amount. The operational creditor issued a demand notice under section 8 of the Code, which remained unanswered by the respondent, indicating a clear default in payment.
3. The Adjudicating Authority found the application complete with supporting documents like invoices, board resolution, and demand notice. The authority ascertained the default date, confirmed the absence of pre-existing disputes, and established the debt and default, satisfying the conditions under Section 9 of the Act.
4. Referring to the Mobilox case, the authority confirmed the existence of operational debt exceeding Rs. 1.00 lac, due and payable with no dispute raised by the respondent. The authority declared a moratorium, directing the Interim Resolution Professional to initiate the Corporate Insolvency Resolution Process and manage the corporate debtor's operations during the resolution process.
5. The order of moratorium prohibited legal actions against the corporate debtor, asset alienation, and enforced the continuation of essential services. An Interim Resolution Professional was appointed, and the operational creditor was directed to provide advance funds for the resolution process. The authority communicated the order to all relevant parties and instructed the Registrar of Companies to refrain from striking off the respondent's name during the insolvency resolution process.

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