# In the matter of Liz Traders and Agents Private Limited C.P. No. 2941-IBC-MB-2019

> NCLT judgment dated 2022-02-25. Citation: TCN-2022-NCLT-03961. The case involves a petition filed by Xander Financial Services Ltd. against Liz Traders and…

- **Court:** NCLT
- **Order date:** 25 Feb 2022
- **Citation:** TCN-2022-NCLT-03961
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/liz-traders-and-agents-private-limited-cp-no-2941-ibc-mb-2019-9fbfd2f5

## Summary

### Background

The case involves a petition filed by Xander Financial Services Ltd. against Liz Traders and Agents Private Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The financial creditor claims that the corporate debtor defaulted on a term loan facility of Rs. 30 crore granted in November 2016. The corporate debtor allegedly failed to maintain the stipulated security cover and defaulted on interest payments, leading to a total outstanding amount of Rs. 28,57,431 as of July 1, 2019. The financial creditor issued a notice of default in July 2019, but the corporate debtor failed to rectify the default.

## Facts

Xander Financial Services Ltd. (Financial Creditor) granted a term loan facility of Rs. 30 crore to Liz Traders and Agents Private Limited (Corporate Debtor) in November 2016. The loan was secured by a pledge of shares of a listed company owned by the Corporate Debtor, along with other securities and a personal guarantee. The Corporate Debtor was obligated to maintain a security cover of 2x the drawdown amount. The Corporate Debtor defaulted on interest payments and failed to maintain the required security cover. As of July 1, 2019, the outstanding amount was Rs. 28,57,431. The Financial Creditor issued a notice of default on July 9, 2019, but the Corporate Debtor failed to cure the default. The Corporate Debtor argued that there was no board resolution authorizing the

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## Issues and analysis

### Issue 1: Whether the Corporate Debtor defaulted on its obligations under the loan agreement with the …

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

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**Reasoning:** The NCLT found that the Corporate Debtor had defaulted on its obligations under the loan

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**Interpretation:** The interpretation of Section 7 of the IBC is that if a financial debt exists

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**Application:** The NCLT applied Section 7 of the IBC to the facts of the case, finding that

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## Parties

- **Judges:** H.V. Subb…; Chandra Bha…
- **Appellants:** Xander Finance…
- **Respondents:** Liz Traders and…
- **Advocates:** Suvaankoo…

## Timeline

- **2016-11-18 — Loan Agreeme…**: Date of the loan agreement between Xander Financial Services Ltd. and Liz Traders and…
- **2016-11-21 — Loan Disbur…**: The Financial Creditor disbursed the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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