Corporate Insolvency Resolution Process Initiated Following Financial Distress Triggered by COVID-19, Operational Challenges and Cash Flow Crisis; Interim Resolution Professional Appointed
In a significant ruling dated September 1, 2026, the National Company Law Tribunal (NCLT), Division Bench Chennai, comprising Mr. Sanjiv Jain (Member Judicial) and Mr. Venkataraman Subramaniam (Member Technical), admitted the Corporate Insolvency Resolution Process (CIRP) petition filed by Wootu Nutrition Private Limited under Section 10 of the Insolvency and Bankruptcy Code (IBC), 2016.
Wootu Nutrition, a Chennai-based chain specializing in personalized diet and nutrition clinics, sought initiation of CIRP following severe financial distress caused primarily by the unprecedented revenue losses during the COVID-19 pandemic and the subsequent lockdowns. Despite efforts to revive its business through franchise investments aimed at boosting branding and marketing, the company’s cash flows were significantly strained by substantial payouts to franchises. Additionally, heavy rainfall in November 2023 led to cancelled consultations and further revenue drops, triggering a cascade of financial difficulties including delayed salaries, overdue EMIs, pending franchise payouts, and unpaid rents.
The company’s total outstanding liabilities as on March 31, 2025, stood at ₹7,56,66,642, with assets valued at approximately ₹1,62,27,840. The financial crisis forced Wootu Nutrition to close several branches and resulted in employee departures, further eroding investor confidence and leading to an inability to repay its debts.
The petition was filed by Ms. Mani Geetha Priya, Director of Wootu Nutrition, who submitted requisite financial documents, creditor lists, board and special resolutions approving the CIRP filing, and proposed Mr. Lakshminaraynapuram Krishnan Sivaramakrishnan as the Interim Resolution Professional (IRP). The petition complied fully with Section 10 and Form-6 requirements of the IBC and was filed in good faith without any intent to defraud creditors.
The Tribunal carefully examined the petition and accompanying documents, including loan statements, demand notices from financial creditors, and orders under the Payment of Wages Act. No creditor raised objections or claimed the petitioner’s ineligibility under Section 11 of the IBC. Yes Bank, a financial creditor, confirmed that the outstanding dues had been settled under an One-Time Settlement (OTS) in September 2025, closing their loan account.
Following precedents set by the National Company Law Appellate Tribunal (NCLAT) in landmark cases such as Unigreen Global Pvt. Ltd. vs Punjab National Bank and Go Airlines (India) Limited, the NCLT reiterated that if the application under Section 10 is complete and there is a debt default with no disqualifications, the Adjudicating Authority is bound to admit the petition without conducting extensive inquiries.
Accordingly, the NCLT admitted the petition, thereby initiating the CIRP against Wootu Nutrition. The Tribunal declared a moratorium under Section 14 of the IBC, prohibiting institution or continuation of suits, transfer or alienation of assets, foreclosure of security interests, and recovery of properties from the company during the CIRP period.
The IRP, Mr. Sivaramakrishnan, was appointed to take custody and control of the company’s assets and manage its affairs, with the powers of the existing Board of Directors suspended under Section 17 of the Code. The IRP was directed to file status reports within 20 days and to ensure compliance with the Code, including preparing an inventory of assets and facilitating cooperation from the suspended directors and statutory auditors.
The Tribunal emphasized the statutory obligation of the suspended Board to provide access to books of accounts for the preceding eight financial years and to assist in the retrieval of records, including electronic data and audit trails. It also authorized the IRP to seek assistance from police authorities and digital forensic experts if there was any non-cooperation.
The company was ordered to pay ₹3,00,000 to the IRP to cover expenses related to the insolvency resolution process. Copies of the order were directed to be communicated to the Corporate Debtor, the Insolvency and Bankruptcy Board of India (IBBI), and the Registrar of Companies.
This ruling underscores the strict procedural adherence required under the IBC for initiating insolvency resolution and reflects the judiciary’s commitment to expeditiously resolving corporate insolvencies while protecting the interests of creditors, employees, and other stakeholders.
Bottom Line:
Corporate Insolvency Resolution Process (CIRP) - Petition under Section 10 of the Insolvency and Bankruptcy Code (IBC), 2016 by Corporate Applicant - Petition admitted upon satisfaction of debt default, compliance with requisite formalities, and absence of ineligibility under Section 11 of IBC.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 10, 11, 14, 15, 16, 17, 18, 31, 33, 65; Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016; Payment of Wages Act, 1936; Companies Act, 2013 Section 128; Companies (Registered Valuers and Valuation) Rules, 2017; Companies Accounts Rules, 2014
Mani Geetha Priya, (NCLT)(Division Bench, Chennai) : Law Finder Doc Id # 2972814
