2021 (5) TMI 277 - Tri - Insolvency and Bankruptcy

Tribunal Admits Financial Creditor's Petition Against Corporate Debtor under Insolvency and Bankruptcy Code

The Tribunal admitted the petition filed by ASREC (India) Limited as a Financial Creditor against Cane Agro Energy (India) Limited under Section 7 of the ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Assignment of debt - existence of debt and dispute or not - HELD THAT:- The Petitioner being the assignee under the assignment deed dated 30.03.2019 and 05.11.2019 have taken over the loan the term loans of DNSB(original Lender), cash credit facilities granted by DNSB. The said term loan and cash credit loan accounts of the Corporate Debtor were declared as NPA as on 31.01.2019 and 31.03.2019. The Petitioner post assignment of debt issued Recall Notice dated 10.01.2020 to the DNSB demanding the outstanding liabilities of ₹ 8,60,09,164.14/- in the term loan and outstanding dues of cash credit dues of ₹ 27,83,07,159.48/-. The Corporate Debtor filed its reply admitting the liability and granted loan by the Petitioner by the DNSB which has assigned the Petitioner herein and further requested the time of 6 months for the repayment of entire monies. In view of the admission of liability by the Corporate Debtor on 16.04.2021 and the fact that there is a debt and default of non-payment of amounts under the term loan and the cash credit facility, both the loan accounts were thus declared as NPA as on 31.01.2019 and 31.03.2019. The Corporate Debtor in its reply sought six months' time to repay the debt, there is no denial of sums borrowed and default of non-payment. This bench is of the opinion that all the ingredients of Section 7 are satisfied and that the amounts disbursed by Petitioner to the Corporate debtor under two different facilities (term loan and Cash Credit facility) remain outstanding, owing to the default of non-payment by the Corporate Debtor. Hence, the Petition is admitted. The nature of Debt is a 'Financial Debt' as defined under section 5 (8) of the Code. It has also been established that there is a 'Default' as defined under section 3 (12) of the Code on the part of the Debtor. The two essential qualifications, i.e., existence of 'debt' and default', for admission of a Petition under Section 7 of the I&B Code, have been met in this case. Besides, the Company Petition is well within the period of limitation. This petition is admitted. Petition admitted - moratorium declared. Issues Involved:1. Admissibility of the petition under Section 7 of the Insolvency and Bankruptcy Code (IBC).2. Existence of financial debt and default by the Corporate Debtor.3. Appointment of Interim Resolution Professional (IRP).4. Application of Moratorium under Section 14 of the IBC.Detailed Analysis:1. Admissibility of the Petition under Section 7 of the IBC:The petition was filed by ASREC (India) Limited in the capacity of a 'Financial Creditor' against Cane Agro Energy (India) Limited, invoking Section 7 of the Insolvency and Bankruptcy Code (IBC). The Petitioner claimed a default amounting to Rs. 38,87,53,376/-, including interest. The Tribunal noted that the petition was filed within the period of limitation and that the essential qualifications for admission under Section 7, i.e., the existence of 'debt' and 'default', were met.2. Existence of Financial Debt and Default by the Corporate Debtor:The Petitioner, a Securitization and Asset Reconstruction Company, acquired the debt from the original lender, Dombivli Nagari Sahakari Bank Limited (DNSB), and Sangli Urban Co-operative Bank Ltd. The Corporate Debtor had defaulted on the term loan and cash credit facilities, which were declared as Non-Performing Assets (NPA) on 31.01.2019 and 31.03.2019, respectively. The Corporate Debtor acknowledged the debt and default but cited financial constraints and adverse impacts due to COVID-19 and poor rainfall as reasons for non-payment. Despite this, the Corporate Debtor admitted liability and requested six months to repay the debt, which was not accepted by the Petitioner.3. Appointment of Interim Resolution Professional (IRP):The Tribunal reviewed the written consent of the proposed IRP, Mr. Ritesh R. Mahajan, and found no disciplinary actions pending against him. Consequently, Mr. Mahajan was appointed as the IRP to conduct the Insolvency Resolution Process.4. Application of Moratorium under Section 14 of the IBC:Upon admitting the petition, the Tribunal declared a moratorium as prescribed under Section 14 of the IBC. This moratorium prohibits the institution of any suits against the Corporate Debtor, transferring/encumbering any assets, and ensures the supply of essential goods/services is not terminated during this period. The moratorium will remain effective until the completion of the Insolvency Resolution Process or the approval of the Resolution Plan under Section 31 of the IBC.Conclusion:The Tribunal concluded that the nature of the debt was a 'Financial Debt' under Section 5(8) of the IBC and that there was a 'Default' under Section 3(12) of the IBC. All the conditions for admitting the petition under Section 7 were satisfied. The petition was thus admitted, and the Corporate Insolvency Resolution Process (CIRP) commenced from the date of the order. The IRP was directed to perform duties under Sections 18 and 15 of the IBC and report progress within 30 days. The petition was thereby 'Admitted,' and the CIRP was to commence immediately.