Silcotex Silicones wins against Cubatics in Insolvency Petition, Rs. 39,87,345.74 dues unpaid

The petition filed by M/s. Silcotex Silicones Private Limited against Cubatics Industries Private Limited under Section 9 of the Insolvency and Bankruptcy Code, 2016 was allowed. The Corporate Debtor failed to pay dues amounting to Rs. 39,87,345.74, leading to the initiation of the Corporate Insolvency Resolution Process (CIRP). The tribunal appointed an Interim Resolution Professional, imposed a moratorium, and outlined directives for managing the Corporate Debtor during the CIRP.

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Issues Involved:
1. Existence of Debt and Default
2. Adherence to Procedural Requirements
3. Appointment of Interim Resolution Professional (IRP)
4. Moratorium Imposition
5. Management of Corporate Debtor during CIRP

Issue-wise Detailed Analysis:

1. Existence of Debt and Default:
The Operational Creditor, M/s. Silcotex Silicones Private Limited, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor, Cubatics Industries Private Limited, for initiating the Corporate Insolvency Resolution Process (CIRP). The petition arises from a commercial transaction where the Operational Creditor supplied textile auxiliaries based on verbal orders from the Corporate Debtor and raised various invoices. Despite receiving and acknowledging these invoices, the Corporate Debtor failed to pay the dues amounting to Rs. 36,40,866.66. The Operational Creditor also claimed interest at the rate of 24% per annum from the due date of each invoice, totaling Rs. 3,46,479.08 up to 24th August 2019, making the total claimed default amount Rs. 39,87,345.74. The Corporate Debtor did not make any payment towards these invoices, and the Operational Creditor issued a Demand Notice on 24th August 2019, which was not complied with by the Corporate Debtor.

2. Adherence to Procedural Requirements:
The petition was filed on 17th January 2020, within the limitation period, and the Operational Creditor provided all necessary documents, including invoices, Demand Notice, and track report of service of Demand Notice. The Corporate Debtor failed to appear before the tribunal despite being served notice, leading to an ex-parte decision by the bench on 20th October 2021. The tribunal reviewed the documents and found the existence of debt and default unchallenged, fulfilling the requirements for admission under Section 9 of the Code.

3. Appointment of Interim Resolution Professional (IRP):
The tribunal appointed Mr. Kailas T. Shah as the Interim Resolution Professional (IRP) to carry out the functions as per the Insolvency & Bankruptcy Code, 2016. The Operational Creditor was directed to deposit Rs. 2 Lakh towards the initial CIRP cost in favor of the appointed IRP.

4. Moratorium Imposition:
The tribunal imposed a moratorium prohibiting the institution or continuation of suits or proceedings against the Corporate Debtor, transferring or disposing of any assets, and any action to foreclose or recover any security interest. The supply of essential goods or services to the Corporate Debtor was ordered to continue without termination or suspension during the moratorium period. The moratorium would be effective from the date of the order until the completion of the CIRP or approval of the resolution plan or liquidation order.

5. Management of Corporate Debtor during CIRP:
During the CIRP period, the management of the Corporate Debtor would vest in the IRP/RP. The suspended directors and employees were required to provide all documents and information to the IRP/RP. The public announcement of the CIRP was to be made immediately as specified under Section 13 of the Code. The registry was directed to send a copy of the order to the Registrar of Companies, Mumbai, for updating the Master Data of the Corporate Debtor.

Conclusion:
The petition was allowed, and the initiation of CIRP against Cubatics Industries Private Limited was ordered. The tribunal's decision included the appointment of an IRP, imposition of a moratorium, and directives for the management of the Corporate Debtor during the CIRP. The registry was instructed to communicate the order to both parties and the IRP immediately.

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