Operational debt default under the Insolvency and Bankruptcy Code led to time granted for settlement instead of insolvency admission.

An application under the Insolvency and Bankruptcy Code, 2016 was based on an alleged operational debt supported by service records, notices and a demand notice. The corporate debtor did not raise a dispute within the statutory period, and the debt and default were treated as established on the record. However, the corporate debtor also expressed willingness to settle the claim within a short period, so the matter was considered suitable for a brief opportunity to resolve payment rather than immediate commencement of corporate insolvency resolution process. The application was therefore not admitted, and time was granted for settlement of the claim.

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Issues: Whether the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 should be admitted for initiation of corporate insolvency resolution process, or disposed of by granting time for settlement of the operational debt.

Analysis: The application was based on an alleged operational debt supported by service agreement records, notices, and a demand notice. The corporate debtor did not raise a dispute within the statutory period and the debt and default were treated as established on the record. At the same time, the corporate debtor expressed willingness to settle the claim within a short period, and the matter was therefore considered fit for a short opportunity rather than immediate insolvency commencement.

Conclusion: The application was not admitted for initiation of corporate insolvency resolution process and time was granted for settlement of the claim.

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