NCLT Initiates Voluntary CIRP Against IMFL Manufacturer a After Establishing ₹1.80 Crore Financial Default [Read Order]

The National Company Law Tribunal, Chandigarh Bench has accepted the voluntary insolvency petition under Section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC), filed by an Indian Made Foreign Liquor (IMFL) manufacturer on the basis of the financial default of ₹1.80 crore.

The Bench comprising Mr. Khetrabasi Biswal (Judicial Member) and Mr. Shishir Agarwal (Technical Member) was of the view that the corporate insolvency petition applicant had satisfied all the requirements under the IBC for initiating the Corporate Insolvency Resolution Process.

The corporate debtor has availed financial assistance in the form of a term loan and working capital funding from The Himachal Pradesh State Co-operative Bank Ltd. The term loan has been fully settled and closed in 2018.

READ MORE:SC Upholds Conviction In Foreign Watch Smuggling Case under Customs Act, Reduces Sentence To Period Already Undergone

However, the working capital account has become irregular due to financial difficulties and adverse market conditions, thereby making it a Non-Performing Asset (NPA).The SARFAESI process was invoked by the bank in the form of demand notices and possession notices. The default has been reflected in the audited financial statements for subsequent years.

The counsel appearing for the corporate applicant has pointed out that the application has been duly authorized by means of a special resolution passed by shareholders and has been supported by complete financial information and bank statements along with the consent of the proposed Interim Resolution Professional (IRP).

The Tribunal followed the principles laid down in the case of Unigreen Global Pvt. Ltd. v. Punjab National Bank & Ors., in which the National Company Law Appellate Tribunal held that “admission is mandatory after establishing default and upon satisfaction that application is complete.”

The Tribunal found that the application was complete and default was substantiated and accordingly admitted the application under Section 10 ordered moratorium under Section 14 and appointed Ms. Bhavna Bansal as Interim Resolution Professional to initiate the CIRP process.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates