Settlement liability and non-payment established default, supporting admission of the insolvency petition and continuation of the property restraint.

A subsisting settlement liability and continued non-payment were treated as sufficient to establish operational debt and default, justifying admission of the operational creditor's insolvency petition and commencement of CIRP. Once the petition was admitted, the moratorium came into force and the prior restraint on the corporate debtor's property was not lifted, as the attachment was held to continue during the insolvency process. The ancillary request to vacate the restraint order was therefore rejected.

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Issues: (i) Whether the operational creditor had established debt and default so as to justify admission of the petition and commencement of the corporate insolvency resolution process. (ii) Whether the request to lift the restraint/attachment order over the corporate debtor's property could be granted.

Issue (i): Whether the operational creditor had established debt and default so as to justify admission of the petition and commencement of the corporate insolvency resolution process.

Analysis: The parties had entered into a settlement under which the corporate debtor the liability to pay a quantified amount within the stipulated period. The record showed non-payment in terms of that settlement and continued breach despite opportunities to settle. On that basis, the adjudicating authority found that the operational debt and default were established and that admission under the insolvency framework was warranted.

Conclusion: The issue was decided in favour of the petitioner and against the corporate debtor; the petition was admitted and CIRP was directed to commence.

Issue (ii): Whether the request to lift the restraint/attachment order over the corporate debtor's property could be granted.

Analysis: A prior restraint order over the specified property was already in force. Since the petition was being admitted, the authority held that the restraint would continue during the insolvency process and that the request to raise the attachment was not acceptable at that stage.

Conclusion: The issue was decided against the applicant seeking lifting of the order; the request was dismissed and the restraint was left intact.

Final Conclusion: The petition resulted in initiation of insolvency proceedings against the corporate debtor, the moratorium came into operation, and the ancillary request to vacate the property restraint was rejected.

Ratio Decidendi: Proof of a subsisting settlement liability coupled with non-payment in terms thereof is sufficient to establish default for admission of an operational creditor's insolvency petition, and incidental relief affecting protected assets will not be granted once CIRP is admitted.

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