2022 (2) TMI 460 - Tri - Insolvency and Bankruptcy

Tribunal Appoints Resolution Professional for Corporate Insolvency - Code Compliance & Asset Protection

Mahendra Kumar Singhi Versus Indian Bank and Ors.

The Tribunal acknowledged the application to initiate Corporate Insolvency Resolution Process against the Guarantor under the Insolvency and Bankruptcy ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - Non-Performing Assets - HELD THAT:- It is clarified that from the date of filing this Application i.e., 03.12.2021 by the Applicant/Guarantor, Interim Moratorium commences as stipulated under Section 96(1) of the Code in relation to the debts of the Personal Guarantor. During the Interim Moratorium period: (i) any legal action or proceedings pending in respect of any debt shall be deemed to have been stayed: and (ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. As per Section 96(3) of the Code, the provisions of Sub-section 96(1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. The Resolution Professional is directed to exercise all the powers as enumerated under Section 99 of the Code, r/w Rules made thereunder. He is directed to make the recommendations with reasons in writing for acceptance or rejection of this Application within the stipulated time as envisaged under the provisions of Section 99 of the Code - List the matter for further proceedings in this case on 15.03.2022. Issues:Initiation of Corporate Insolvency Resolution Process against the Guarantor under IBC, 2016.Analysis:The judgment pertains to an application filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process against a Guarantor for loans secured by a Corporate Applicant. The Applicant, represented by counsel, detailed the debt and default amounting to Rs. 181,24,67,000, for which the Guarantor is liable. The Corporate Applicant faced financial troubles after a raid by the GST Department, resulting in non-payment of debts to financial creditors like Indian Bank, Vijaya Bank, and Aditya Birla Finance Limited. Consequently, the financial creditors classified the accounts as Non-Performing Assets and initiated recovery proceedings. The Corporate Applicant had already filed for Corporate Insolvency Resolution Process earlier, and an Interim Resolution Professional was appointed.The Tribunal, comprising Members, acknowledged the application filed under Section 94(1) of the Code and Rule 6(1) of the relevant Rules. It was noted that the Interim Moratorium period commenced upon filing the application, staying legal actions on debts. The appointment of a Resolution Professional was deemed critical to safeguard the Guarantor's assets. The proposed Interim Resolution Professional was confirmed by the Bench, emphasizing the importance of this appointment. The Applicant was directed to serve the order and documents on the Resolution Professional promptly, while the Resolution Professional was instructed to exercise powers under Section 99 of the Code and provide recommendations within the specified time frame. The Resolution Professional was further mandated to share the report with creditors and the Corporate Applicant. The matter was listed for further proceedings on a specific date.In conclusion, the judgment delves into the legal intricacies of initiating Corporate Insolvency Resolution Process against a Guarantor, emphasizing compliance with the provisions of the Insolvency and Bankruptcy Code, 2016, and ensuring the appointment of a Resolution Professional to oversee the process effectively.