# In the matter of Vibrant Fab Pvt Ltd., CP (IB) No. 174-7-NCLT-AHM-2020

> NCLT judgment dated 2020-12-31. Citation: TCN-2020-NCLT-00004. Drip Capital Inc. filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016,…

- **Court:** NCLT
- **Order date:** 31 Dec 2020
- **Citation:** TCN-2020-NCLT-00004
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/vibrant-fab-pvt-ltd-cp-ib-no-174-7-nclt-ahm-2020-99aea4b7

## Summary

### Background

Drip Capital Inc. filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy Application to Adjudicating Authority Rules, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Vibrant FAB Pvt. Ltd. Drip Capital Inc., a financial creditor, claimed that Vibrant FAB Pvt. Ltd. had defaulted on payments related to assigned invoices. The financial creditor had disbursed USD 300,000 to the corporate debtor against two invoices. The date of default was stated as January 20, 2020.

## Facts

Drip Capital Inc. (Financial Creditor) filed a petition against Vibrant FAB Pvt. Ltd. (Corporate Debtor) under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The Financial Creditor had granted an aggregate amount of USD 300,000.00 to the Corporate Debtor towards assignment of its two invoices, disbursed on 30.08.2019 and 11.09.2019. As of 31st January 2020, the default amount under the Agreement read with Undertaking is USD 3,15,168.15 approximately equivalent to INR 2,24,80,994.13. The date of default is 20th January, 2020. The Financial Creditor submitted documents including the Receivables Purchase Factoring Agreement dated 04.06.2019 and an Irrevocable Undertaking dated 04.06.2019. The

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## Issues and analysis

### Issue 1: Whether the application filed by the Financial Creditor under Section 7 of the Insolvency and …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016, allows a financial creditor to

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**Reasoning:** The Adjudicating Authority considered the documents submitted by the petitioner and was

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**Interpretation:** Section 7 provides the mechanism for financial creditors to trigger the

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**Application:** The Financial Creditor, Drip Capital Inc., demonstrated the existence of a

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## Parties

- **Judges:** Manorama…; Chockalingam…
- **Appellants:** Drip Capit…
- **Respondents:** Vibrant FAB…; Vibrant Fab Pvt…

## Timeline

- **2011-08-29 — Incorporation of…**: Vibrant FAB Pvt. Ltd.…
- **2018-11-22 — Term Sheet…**: Term sheet letter containing the in-principle indicative term sheet for Export Factoring…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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