NCLT Initiates Insolvency against Labhanshi Multitrade Over Rs. 1.17 Crore Default [Read Order]
It held that the Financial Creditor had successfully discharged its burden of proof under Section 7 of the IBC by demonstrating the debt and default with comprehensive documentation.
NCL-insolvency-taxscan
NCL-insolvency-taxscan
The Special Bench of the National Company Law Tribunal (NCLT) at Indore has admitted a Section 7 application under Insolvency and Bankruptcy Code (IBC), 2016 and initiated the Corporate Insolvency Resolution Process (CIRP) against Labhanshi Multitrade Private Limited, holding that the existence of a financial debt and default was undisputed.
The application was filed by the Financial Creditor, Avanti Finance Private Limited, an NBFC, against the Corporate Debtor, Labhanshi Multitrade Private Limited, which is engaged in the business of agricultural commodities. The petition stemmed from a default on a loan of Rs. 2 crore, with the outstanding amount claimed to be over Rs. 1.17 crore as of July 2024. The date of default was recorded as 15th April 2024.
During the proceedings, the Corporate Debtor, represented by counsel, admitted the existence of the debt and the default. The company cited a financial crisis and a complete shutdown of operations, requesting a period of three years to repay the dues.
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A bench comprising Judicial Member Mohan P. Tiwari and Technical Member Sanjeev Sharma observed that the requirements of Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016 (IBC) were satisfied. The Tribunal noted that the existence of a financial debt exceeding Rs. 1 crore and the default in its repayment were "undisputed".
It held that the Financial Creditor had successfully discharged its burden of proof under Section 7 of the IBC by demonstrating the debt and default with comprehensive documentation.
Consequently, the Tribunal found that the Corporate Debtor's default justified the admission of the petition and the initiation of the CIRP. Accordingly, the NCLT admitted the application and declared a moratorium under Section 14 of the IBC, prohibiting all actions against the Corporate Debtor.
Ms. Chhaya Gupta was appointed as the Interim Resolution Professional (IRP) to manage the process, and the Tribunal passed a series of consequential directions for the conduct of the CIRP.
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