Company’s Financial Default Clearly Established and Above Threshold u/s 4(1) of IBC: NCLT Admits Plea for Insolvency [Read Order]

NAC Advertising India Private Limited, the corporate applicant, filed the petition under Section 10 of the Code read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking to initiate CIRP due to its inability to repay dues owed to financial creditors, operational creditors, and government authorities.

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The company submitted that it had been incurring financial losses continuously for six to eight years and was under heavy debt. The corporate applicant stated that its inability to service its debt had led to the transfer of its loan account with IndusInd Bank to Edelweiss Asset Reconstruction Company Limited, which had also issued a notice of possession for the mortgaged office property.

The total default stood at Rs. 9.92 crore, including dues of Rs. 4.25 crore to financial creditors, Rs. 91.71 lakh to the government, and Rs. 4.75 crore to operational creditors.

The company placed on record its unaudited financial statements for multiple years, showing liabilities in excess of assets. It also filed board and shareholder resolutions authorising the filing of the application and proposed the name of Mr. Brijendra Kumar Mishra as Interim Resolution Professional (IRP), along with his consent in the prescribed form.

The two-member panel comprising Prabhat Kumar (Technical Member) and Sushil Mahadeorao Kochey (Judicial Member) examined the documents and arguments presented and explained that the application was complete in all respects. The tribunal further stated that the default exceeded the minimum amount prescribed under Section 4(1) of the Code and was clearly established. It also explained that no objections had been received from any creditors against the admission of the petition.

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Based on these findings, the tribunal admitted the petition and ordered the initiation of CIRP against NAC Advertising India Private Limited. It declared a moratorium under Section 14 of the Code and appointed Mr. Brijendra Kumar Mishra as the IRP.

The IRP was directed to carry out its functions as per the provisions of the Code. The suspended board was directed to deposit Rs. 3,00,000 to cover initial CIRP costs. The Registry was directed to send the order to the Corporate Applicant, IRP, and the Registrar of Companies for compliance.

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