Corporate Debtor Enters Insolvency Process for Defaulting on Rs. 89M+ Debt

Dena Bank Versus Hind Sintex Limited

Dena Bank Versus Hind Sintex Limited - TMI Issues:
Admission of Corporate Debtor in CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The Financial Creditor, a bank, filed an application under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor, a company, for the outstanding amount of Rs. 81,78,54,736.50 as on 31.01.2019. The loan was sanctioned to the borrower Wearit Global Ltd., and the Corporate Debtor provided a corporate guarantee for the loan amount. Despite various notices and reminders, the Corporate Debtor failed to repay the outstanding amount, leading to the initiation of the insolvency resolution process.

The Adjudicating Authority noted the default amount of Rs. 89,75,40,237.91, along with interest, and the admission of debt by the Corporate Debtor in a letter dated 25.08.2018. The Corporate Debtor did not contest the application, resulting in an ex-parte order against them. The Authority found the application complete and defect-free, meeting the requirements under Section 4 of the Code to initiate CIRP. Consequently, the Corporate Debtor was admitted into the Corporate Insolvency Resolution Process.

The Authority appointed an Interim Resolution Professional (IRP) proposed by the Financial Creditor to manage the CIRP. A moratorium under Section 14 of the Code was imposed, prohibiting suits or proceedings against the Corporate Debtor and restricting actions on its assets. The IRP's duties, including protecting the Corporate Debtor's property value and managing operations, were outlined. The Financial Creditor was directed to pay the IRP fees and expenses, pending approval by the Committee of Creditors (COC).

The order directed communication to relevant parties, commencement of CIRP from the order date, and upload of the order on the website. The judgment emphasized the importance of cooperation with the IRP and compliance with legal obligations. The resolution process was set in motion, ensuring continuity of essential services to the Corporate Debtor during the moratorium period.