Operational Creditor's Insolvency Application Admitted, Moratorium Declared, IRP Appointed

The Tribunal admitted the Operational Creditor's application under Section 9 of the Insolvency and Bankruptcy Code against the Corporate Debtor for default in payment. A moratorium was declared, prohibiting actions against the Corporate Debtor. An Interim Resolution Professional was appointed to manage the affairs of the Corporate Debtor until the completion of the Corporate Insolvency Resolution Process or liquidation. The IRP will oversee the submission of claims, manage operations, and protect the Corporate Debtor's property. The Applicant was directed to deposit funds for expenses, and the order was communicated for compliance, leading to the disposal of the application.

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Issues:
Initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 against a Corporate Debtor for default in payment.

Analysis:
1. The Operational Creditor, in this case, filed a company application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for the default amount of Rs. 1,49,20,054/-.

2. The Operational Creditor supplied goods to the Corporate Debtor as per a purchase order and raised invoices for the same. Despite multiple reminders, the Corporate Debtor failed to pay the outstanding amount, citing financial constraints due to Covid-19.

3. A statutory demand notice was issued under Section 8 of the IB Code, which the Corporate Debtor did not respond to. The Corporate Debtor later admitted the outstanding amount but mentioned financial difficulties and NPA classification by the bank.

4. The Tribunal found the application complete as per the provisions of the IB Code, meeting the threshold limit. The application was filed within the limitation period, and the date of default was established.

5. Consequently, the Tribunal admitted the application under Section 9 (5) (a) of the IB Code and declared a moratorium under Section 14(1) of the Code, prohibiting various actions against the Corporate Debtor.

6. The moratorium will be in effect until the completion of the Corporate Insolvency Resolution Process or until a Resolution Plan is approved or liquidation is ordered. An Interim Resolution Professional (IRP) was appointed to manage the affairs of the Corporate Debtor.

7. The IRP is mandated to make a public announcement of the initiation of the Corporate Insolvency Resolution Process, call for submission of claims, and manage the operations of the Corporate Debtor as a going concern.

8. The Applicant was directed to deposit a sum with the IRP to cover expenses. The IRP is obligated to protect and preserve the value of the Corporate Debtor's property.

9. The order was communicated to all relevant parties and authorities for compliance and record-keeping purposes, and the application was allowed and disposed of by the Tribunal.

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