Tribunal Admits Corporate Debtor for Insolvency Resolution Process

The Tribunal admitted the Corporate Debtor in Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code. A moratorium was declared under Section 14, appointing an Insolvency Resolution Professional to manage the process. The Operational Creditor was instructed to pay an advance for the proceedings, with the IRP authorized to request additional funds as needed. Progress reports were required to be filed for ongoing monitoring.

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Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 based on default in paying an Operational Debt.

Detailed Analysis:
The Application was filed by the Operational Creditor to initiate Corporate Insolvency Resolution Process against the Corporate Debtor for defaulting on an Operational Debt of Rs. 15,20,526/- related to textile services provided by the Operational Creditor. The Corporate Debtor failed to clear the outstanding amount despite repeated demands and a demand notice under Section 8 of the IBC. The Corporate Debtor admitted the amount claimed in the application and did not dispute the supply of goods by the Operational Creditor.

The Tribunal found the petition to be defect-free and meeting the prescribed threshold under Section 4 of the IBC. The claim amount of Rs. 15,20,526/- was within the limit before the notification raising the default amount to Rs. 1,00,00,000/-. The Tribunal concluded that the petition was complete and fit for triggering the Insolvency Resolution Process for the Corporate Debtor. The Tribunal admitted the Corporate Debtor in Corporate Insolvency Resolution Process under Section 9 of the IBC.

The Tribunal declared a moratorium under Section 14 of the IBC, prohibiting various actions against the Corporate Debtor, effective until the completion of the Corporate Insolvency Resolution Process or approval of a Resolution Plan. An Insolvency Resolution Professional (IRP) was appointed to conduct the CIRP. The IRP was directed to make a public announcement, call for submission of claims, and ensure the continuity of goods/services supply to the Corporate Debtor during the moratorium period.

The Operational Creditor was directed to pay an advance to the IRP for the smooth conduct of the CIRP. The IRP was granted the authority to raise further demands for interim funds as required. The Registry was instructed to communicate the order to relevant parties and upload it on the website. The Tribunal allowed the CP(IB) and directed the Insolvency Resolution Professional to file progress reports for further proceedings.

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