2022 (11) TMI 402 - Tri - Insolvency and Bankruptcy

Tribunal admits application under Insolvency and Bankruptcy Code, appoints Interim Resolution Professional for Corporate Debtor

The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process ... Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - assignment of debt - HELD THAT:- The applicant has claimed the default on part of the Respondent for the Loan amount of Rs. 1,21,68,208/- as on 30.03.2022 - Mere plain reading of the provision under section 7 of IBC shows that in order to initiate CIRP under Section 7 the applicant is required to establish that there is a financial debt and that a default has been committed in respect of that financial debt. Section 5(7) of IBC, 2016 defines Financial Creditor as 'any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to.' Vide Deed of Assignment dated 30.09.2021 executed between the lender of the Corporate Debtor and the Applicant in this matter, the financial debt was assigned to the Applicant. The documents submitted by the Financial Creditor and the Corporate Debtor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has indebted and defaulted the repayment of loan amount - upon appreciation of the documents placed on record to substantiate the claim, this Tribunal admits this petition and initiates CIRP on the Corporate Debtor with immediate effect. Petition admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP)2. Existence of Financial Debt and Default3. Assignment of Debt4. Appointment of Interim Resolution Professional (IRP)5. Declaration of MoratoriumDetailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP):The application was filed by M/s. Achiever Infratech Pvt. Ltd. to initiate CIRP against M/s. Banyantree Infradevelopers Pvt. Ltd. under Section 7 of the Insolvency and Bankruptcy Code 2016 ('the Code') for the alleged default in settling an amount of Rs. 1,21,68,208/- as on 30.03.2022. The Tribunal noted that the applicant is required to establish the existence of a financial debt and a default in respect of that financial debt to initiate CIRP under Section 7.2. Existence of Financial Debt and Default:The Tribunal examined the documents and found that the Corporate Debtor had availed unsecured loans amounting to Rs. 2,28,50,000/- at an interest rate of 18% per annum from A.S. Infradevelopers Pvt. Ltd. (Lender). The Corporate Debtor partially repaid the loan, but defaulted on the remaining amount. The Corporate Debtor admitted the debt and default as per the instructions of its counsel. The Tribunal found that the documents submitted by both parties substantiated the claim that the Corporate Debtor had defaulted in repaying the loan amount.3. Assignment of Debt:The Lender assigned the remaining debt to the Applicant/Financial Creditor with all its rights arising out of the Memorandum of Understanding (MoU). The Corporate Debtor was informed about the assignment of debt via a letter dated 06.10.2021. The Tribunal noted that Section 5(7) of IBC, 2016 defines a Financial Creditor as any person to whom a financial debt is owed, including a person to whom such debt has been legally assigned or transferred.4. Appointment of Interim Resolution Professional (IRP):In compliance with sub-section (3)(b) of Section 7, the Applicant proposed the name of Mr. Devendra Umrao for appointment as IRP. The Tribunal noted that Mr. Devendra Umrao had agreed to accept the appointment and had signed a communication in Form 2 confirming his eligibility and that no disciplinary proceedings were pending against him. The Tribunal found that the requirements of Section 7(3)(b) and Section 16(1) and (2) of the Code were satisfied.5. Declaration of Moratorium:The Tribunal declared a moratorium in terms of Section 14 of the Code, imposing prohibitions on:- The institution or continuation of suits or proceedings against the Corporate Debtor.- Transferring, encumbering, or disposing of any assets of the Corporate Debtor.- Any action to foreclose, recover, or enforce any security interest created by the Corporate Debtor.- The recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor.The Tribunal directed the Interim Resolution Professional to make a public announcement regarding the admission of the application under Section 7 of the Code and to perform all functions as prescribed by the Code, Rules, and Regulations. The Tribunal also emphasized the legal obligation of all personnel connected with the Corporate Debtor to extend assistance and cooperation to the Interim Resolution Professional.Conclusion:The Tribunal admitted the application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, and initiated the Corporate Insolvency Resolution Process against the Corporate Debtor. Mr. Devendra Umrao was appointed as the Interim Resolution Professional, and a moratorium was declared in terms of Section 14 of the Code. The office was directed to communicate the order to relevant parties and update the status of the Corporate Debtor on the Registrar of Companies' website.