Tribunal admits ₹38.84 crore insolvency petition, dismissing pandemic defence due to ongoing default

The tribunal admitted an insolvency plea involving ₹38.84 crore after dismissing the debtor's reliance on a COVID-19 moratorium defence due to a continuing settlement default. The financial creditor maintained its unwillingness to settle the matter out of court, leading to the rejection of the debt resolution proposal. In corporate insolvency resolution processes, debtors often attempt to shield defaults behind extraordinary circumstances like the pandemic or offer delayed settlement deposits.

However, when defaults extend well past protected periods and creditors reject compromise offers, tribunals prioritize statutory insolvency proceedings over stalling tactics. This judicial stance prevents opportunistic forum shopping and enforces strict adherence to resolution frameworks. Practitioners should carefully review ongoing default timelines before relying on historical moratorium arguments for corporate clients.

Financial creditors must assess whether settlement proposals align with statutory restrictions before rejecting them outright during tribunal hearings. Ultimately, robust documentation of continuing defaults remains the deciding factor in securing corporate insolvency admissions.