Tribunal Overrules Objections, Appoints Interim Resolution Professional for CIRP
In a significant ruling, the Ahmedabad Bench of the National Company Law Tribunal (NCLT) has initiated the Corporate Insolvency Resolution Process (CIRP) against M/s Capbridge Venture LLP. The decision came after the tribunal dismissed several objections raised by the corporate debtor, Capbridge Venture LLP, regarding their status as a co-borrower, discrepancies in default dates, and ongoing proceedings under the SARFAESI Act, 2002.
The case, filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, was brought by CFM Asset Reconstruction Private Limited, which claimed a financial debt of Rs. 58.55 crore. The tribunal, after examining the evidence and arguments, concluded that CFM Asset had established the existence of financial debt and the occurrence of a default, thus fulfilling the statutory requirements for initiating CIRP.
The corporate debtor, represented by Mr. Rahul K. Kanoujia, argued that Capbridge was merely a co-borrower and not the principal borrower, and that proceedings under the SARFAESI Act should preclude the initiation of CIRP. However, the tribunal held that the remedies under the SARFAESI Act and the Insolvency Code operate in different fields, allowing for parallel proceedings.
Furthermore, the tribunal addressed concerns over a provisional asset attachment by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002. It ruled that such attachment does not affect the maintainability of the CIRP, although it may have implications during the process.
The tribunal appointed Mr. Bhavesh Manubhai Rathod as the Interim Resolution Professional (IRP) to take control of the corporate debtor's assets and management. It also declared a moratorium on all proceedings against Capbridge Venture LLP, ensuring the protection of its assets and operations during the CIRP.
This decision marks a critical step in the insolvency proceedings, aiming to resolve the financial distress of Capbridge Venture LLP while providing a structured resolution path for the creditors.
Bottom Line :
Insolvency and Bankruptcy Code - Corporate Insolvency Resolution Process (CIRP) initiated against Corporate Debtor despite objections concerning being a co-borrower, discrepancy in default dates, provisional asset attachment, and parallel proceedings under SARFAESI Act.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 7, 13, 14, 15, 16, 17, 18, 20, 21; SARFAESI Act, 2002; Prevention of Money Laundering Act, 2002
