# In the matter of U Foam Pvt. Ltd. CP(IB) No.698-10-HDB-2018

> NCLT judgment dated 2018-12-26. Citation: TCN-2018-NCLT-00013. U Foam Pvt Ltd filed a petition as a Corporate Debtor to initiate Corporate Insolvency…

- **Court:** NCLT
- **Order date:** 26 Dec 2018
- **Citation:** TCN-2018-NCLT-00013
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/u-foam-pvt-ltd-cpib-no698-10-hdb-2018-12c23c83

## Summary

### Background

U Foam Pvt Ltd filed a petition as a Corporate Debtor to initiate Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016, due to its inability to meet financial obligations to its Secured Financial Creditor, Indian Overseas Bank. The company, incorporated in 1959, faced a setback in 2009 due to a fire accident, leading to operational halt and working capital blockage. Financial facilities were restructured in 2013, but the company couldn't sustain operations, resulting in the banker declaring the account as a Non-Performing Asset on March 31, 2015.

## Facts

U Foam Pvt Ltd, the Corporate Debtor, filed an application under Section 10 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The company, incorporated on December 8, 1959, manufactures Polyurethane Foam Products. It suffered a fire accident in 2009, halting operations and blocking working capital. Indian Overseas Bank, the Financial Creditor, restructured the company's financial facilities in 2013. However, the company's operations remained unsustainable, leading to the account being declared a Non-Performing Asset on March 31, 2015. As of the date of the application, the Corporate Debtor owed Rs.60.78 Cr to its creditors. The total debt raised was Rs.34,41,00,000/-, with a default amount of

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor satisfies the conditions for initiating CIRP under Section 10 of the …

**Ratio:** The Adjudicating Authority must admit the application if it is satisfied that a default

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**Reasoning:** The Adjudicating Authority noted that the Corporate Debtor had demonstrated the existence

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**Interpretation:** Section 10 of the IBC allows a corporate debtor to initiate CIRP if it has

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**Application:** In this case, the Corporate Debtor demonstrated the existence of a debt and a

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## Parties

- **Judges:** K. Anantha…
- **Respondents:** U Foam Pv…; Indian Overseas…

## Timeline

- **1959-12-08 — Incorporation of…**: U Foam Pvt Ltd was incorporated in the…
- **2009-01-01 — Fire Acc…**: The Corporate Debtor suffered a serious setback due to a fire accident in its…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 10 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-10)

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