Tribunal Initiates Insolvency Resolution Process under Section 100: Moratorium Declared

The Tribunal admitted the petition under Section 100 of the Insolvency and Bankruptcy Code, initiating the Insolvency Resolution Process against the Personal Guarantor and declaring a moratorium. The Resolution Professional's recommendation for admission was supported by the existence of documents, default by the Corporate Debtor, and the Personal Guarantor's failure to discharge outstanding dues. Despite the Personal Guarantor's non-response, the Resolution Professional was appointed to facilitate the process, including public notice for creditor claims, preparation of a repayment plan, and conducting creditor meetings.

---

---

Issues:
1. Admission of application under Section 95 of the Insolvency and Bankruptcy Code, 2016 against a Personal Guarantor.
2. Recommendation for admission based on grounds such as existence of documents, default by Corporate Debtor, and failure to discharge outstanding dues.
3. Failure of the Respondent/Personal Guarantor to file a reply or written submissions.
4. Appointment of Resolution Professional and initiation of Insolvency Resolution Process.
5. Direction for public notice inviting claims from creditors and preparation of repayment plan.
6. Conduct of meeting of creditors and submission of report to the Adjudicating Authority.

Issue 1: Admission of application under Section 95 of the Insolvency and Bankruptcy Code, 2016 against a Personal Guarantor.

The application under Section 95 was filed by the Financial Creditor against the Personal Guarantor, who had executed a Personal Guarantee Agreement for the outstanding balance dues of the Corporate Debtor. The Resolution Professional recommended the admission of the application based on various grounds, including the initiation of Corporate Insolvency Resolution Process (CIRP) and subsequent liquidation of the Corporate Debtor. The Tribunal admitted the petition under Section 100 of the Code, initiating the Insolvency Resolution Process against the Personal Guarantor and declaring a moratorium.

Issue 2: Recommendation for admission based on grounds such as existence of documents, default by Corporate Debtor, and failure to discharge outstanding dues.

The Resolution Professional's report highlighted the existence of sufficient documents, records, and evidence related to the Personal Guarantee Agreement executed by the Personal Guarantor. It also emphasized the Corporate Debtor's default in satisfying the outstanding claim, lack of response to the Demand Notice, and undisputed record of default uploaded at NeSL Information Utility. The Tribunal observed the continuous defaults by the Corporate Debtor, leading to the initiation of CIRP and subsequent liquidation, supporting the recommendation for admission of the application.

Issue 3: Failure of the Respondent/Personal Guarantor to file a reply or written submissions.

Despite being served notices and provided opportunities, the Respondent/Personal Guarantor failed to file any reply or written submissions in response to the application and the allegations made by the Financial Creditor. This non-response further strengthened the case for admission of the application against the Personal Guarantor.

Issue 4: Appointment of Resolution Professional and initiation of Insolvency Resolution Process.

The Resolution Professional, appointed by the Adjudicating Authority, was directed to cause a public notice inviting claims from all creditors within a specified timeline. The Resolution Professional was tasked with preparing a list of creditors, facilitating the preparation of a repayment plan, and conducting a meeting of creditors if deemed necessary. The initiation of the Insolvency Resolution Process against the Personal Guarantor was formalized through the appointment of the Resolution Professional and the declaration of a moratorium.

Issue 5: Direction for public notice inviting claims from creditors and preparation of repayment plan.

The Resolution Professional was mandated to publish a public notice inviting claims from creditors within a specified period. This notice was required to contain necessary information as per the provisions of the Code. Additionally, the Resolution Professional was instructed to prepare a repayment plan in consultation with the creditors, ensuring compliance with the timelines and procedures outlined in the Code.

Issue 6: Conduct of meeting of creditors and submission of report to the Adjudicating Authority.

In case a meeting of creditors was deemed necessary, the Resolution Professional was directed to summon the meeting within a specified timeframe, ensuring compliance with the procedural requirements. The Resolution Professional was required to prepare a report of the meeting, detailing the repayment plan and other relevant information, to be submitted to the Adjudicating Authority for further review and action.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the grounds for admission of the application, the role of the Resolution Professional, and the procedural steps to be followed in the Insolvency Resolution Process initiated against the Personal Guarantor.

---