Flagship Financials Limited vs Venkat Estates Private Limited

The Petition under section 7 of IBC, 2016 has been filed by the Petitioner/Financial Creditor through Shri G.N. Venkatramana, Practicing Cost Accountant, who has been authorized in this behalf vide Board Resolution dated 01.03.2025, seeking initiation of Corporate Insolvancy Resolution Process against the Respondent/Corporate Debtor for committing default in payment outstanding overdraft limit of Rs.1,77,59,276/- as on 28.02.2025 despite being duly served with Demand Notice dated 20.11.2024. The copies of loan agreement dated 01.02.2023, Bank statements, correspondance and Demand notice have been produced. The name of Resolution Professional is also proposed as is the requisite of format.

The Respondent/Corporate Debtor has filed written submissions through Shri G Sathyanarayana, Chartered Accountant, who has been authorized in this behalf vide Board Resolution dated 30.04.2025 and letter of authorization therein admitted having availed over draft facility through Petitioner initially in the March 2017, which was renewed on 01.02.2023. Due to industry slowdown, rising costs and delayed sales realization from the projects, the Corporate Debtor has been facing severe financial stress and liquidity constraints over last few years that exacerbated by the further obligations of secured creditors viz. Punjab National Bank to which approximately Rs.7.5 Crores is outstanding.

It is stated that the Corporate Debtor has made sincere endaveour to repay the dues of Financial Creditor but has been unable to clear them. The Corporate Debtor expressed willingness to undergo the CIRP Process so as to restructure its debts and explore resolution in a time bound manner through the expertise & intervention of Resolution Professional and arrured to render him full co-operation during the process.

In view of above since there are admitted financial dues of petitioner above the prescribed threshold and date of default is within the period of limitation and non payment on service of Demand notice, It is a fit case for admitting Corporate Debtor to CIRP .

Accordingly, Company Petition bearing C.P (IB) No. 88/BB/2025 is allowed and Corporate Debtor Venkat Estates Private Limited is admitted to undergo CIRP. Simultaneously moratorium is declared in terms of Section 14 of the IB Code thereby prohibiting all of the following:

a. The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

b. Transferring, encumbering, alienating, or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein;

c. Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

d. The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Corporate Debtor;

It is directed that the supply of essential goods or services to the Corporate Debtor, shall not be terminated or suspended or interrupted during the moratorium period in accordance with sub-section (2) of Section 14 of the Code;

The provisions of Sub- section (3) of Section 14 of the Code shall however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator and to a surety in a contract of guarantee to a Corporate Debtor;

The order of moratorium shall have effect from the date of this order till completion of the Corporate Insolvency Resolution Process or until the Resolution Plan submitted under sub-section (1) of Section 31 of the Code or passed an order for liquidation of Corporate Debtor under Section 33 of the IBC, 2016 as the case may be.

As has been proposed in Part-III of Form No.2 with credentials & consent, Mr. Raghunathan Krishnasamy, Registration No. IBBI/IPA-002/IP-N00419/ 2017-18/11200, at Office No. S-212, 2^nd Floor, South Block, Manipal Centre, Dickenson Road, Bengaluru, contact No.: 95350 66902 and email: [email protected] is appointed as the Interim Resolution Professional of the Corporate Debtor. The Interim Resolution Professional is directed to take steps as mandated under the IBC, 2016 especially under Sections 15, 17, 18, 20 and 21 of IBC, 2016.

The Financial Creditor shall deposit a sum of Rs.2,50,000/- (Rupees Two Lakhs Fifty Thousand Only) with the Interim Resolution Professional to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval by the Committee of Creditors.

The Interim Resolution Professional shall after collation of all the claims received against Corporate Debtor and the determination of the financial position of the Corporate Debtor constitute a Committee of Creditors and shall file a report, certifying constitution of the Committee to this Authority on or before the expiry of thirty days from the date of his appointment, and shall convene first meeting of the Committee within seven days for filing the report of Constitution of the Committee. The Interim Resolution Professional is further directed to send monthly progress reports to this Adjudicating Authority.

A copy of the order shall be communicated to both the parties. The learned Counsel for the Petitioner shall deliver a copy of this order to the Interim Resolution Professional forthwith. The Registry is also directed to forward a copy of order to the IRP at his e-mail address forthwith.