2021 (6) TMI 698 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application Against Tuff Tubes Pvt. Ltd.

The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, filed by M/s. Shyamshree Traders (P.) Ltd. against M/s. ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- The applicant has established that the loan amount was given and availed by the Corporate Debtor and there is an outstanding of ₹ 1,40,49,015/- along with interest @ 12% per annum amounting total sum of ₹ 1,65,86,165 due and payable by the Corporate Debtor and the Corporate Debtor has committed default in repayment of the amount. Application allowed - moratorium declared. Issues:1. Application under Section 7 of Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.2. Default in repayment by the Corporate Debtor to the Financial Creditor.3. Appointment of Interim Resolution Professional and declaration of moratorium.Issue 1: Application under Section 7 of Insolvency and Bankruptcy Code, 2016The application was filed by M/s. Shyamshree Traders (P.) Ltd. against M/s. Tuff Tubes (Orissa) Pvt. Ltd. for a due amount of Rs. 1,65,86,165 as on 15.01.2020. The Corporate Debtor had obtained financial assistance from the Bank of India but started defaulting in repayment, leading to negotiations for a One Time Settlement (OTS) scheme. Despite various communications, the Corporate Debtor failed to repay the outstanding amount. The Tribunal found that the loan amount was availed by the Corporate Debtor, establishing an outstanding due of Rs. 1,40,49,015 along with interest, justifying the initiation of Corporate Insolvency Resolution Process.Issue 2: Default in repayment by the Corporate DebtorThe Corporate Debtor acknowledged the outstanding amount but cited financial crisis as a reason for non-repayment. Despite assurances, the repayment was not made, leading to the Financial Creditor filing for Corporate Insolvency Resolution Process. The Tribunal noted the continuous liability of the Corporate Debtor and the default in repayment, further supporting the admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.Issue 3: Appointment of Interim Resolution Professional and declaration of moratoriumThe Tribunal admitted the application and declared a moratorium as per Sections 13 and 15 of the Insolvency and Bankruptcy Code, 2016. The moratorium prohibits various actions against the Corporate Debtor, including suits, asset transfers, and recovery actions. Essential goods or services supply to the Corporate Debtor cannot be terminated during the moratorium period. Mr. Giridhari Lal Sharma was appointed as the Interim Resolution Professional to ascertain creditors' particulars and convene a Committee of Creditors for a Resolution Plan. The Resolution Professional was directed to convene a creditors' meeting within 105 days and submit the Resolution passed. The Interim Resolution Professional was instructed to file the 1st Progress Report by a specified date.In conclusion, the Tribunal admitted the application for Corporate Insolvency Resolution Process, appointed an Interim Resolution Professional, and declared a moratorium to facilitate the resolution of the outstanding dues and financial situation between the Financial Creditor and the Corporate Debtor.