The legal team that advised on the Deccan Chronicle Holdings insolvency had to contend with multiple issues and challenges. The National Company Law Tribunal (NCLT) approved the resolution plan put forward by SREI Multiple Asset Investment Trust, after 81% of the committee of creditors (CoC) voted in favour of it.
“The matter and the process itself was highly complicated,” said Piyush Mishra, a partner at AZB & Partners. “[There were] multiple banking arrangements, competing security interests, various litigations in relation to assets of the company, investigations by government authorities and a peculiar structure of repayment in the resolution plan.”
Mishra said that as the security structure of the CoC was based on bilateral lending arrangements with about 39 banks, it posed many challenges for the process. SREI’s plan involves providing ₹3.5 billion (US$50 million) to category A financial creditors, while category B financial creditors will be permitted to sell non-core assets for the realization of their debt. Operational creditors are to receive ₹60 million.
However, the admitted claims of the financial creditors had amounted to ₹81 billion while the admitted claims of operational creditors amounted to ₹1.5 billion.
Identifying the various issues with the insolvency, Mishra said, “The security of certain banks was not perfected. There were various litigations relating to the trademarks of the company, arbitration with BCCI [Board of Control for Cricket in India], which had significant receivables, and ongoing investigations by the CBI [Central Bureau of Investigation] in the matter.”
SREI’s own claim was for ₹2.6 billion and it had a 3.6% CoC voting share. Some of the main lenders with their CoC voting shares are IDBI Bank (6.7%), Axis Bank (9.8%), Canara Bank (10.1%), ICICI Bank (11.6%) and UV Asset Reconstruction (14.5%). More challenges may be on the horizon for Deccan Chronicle’s insolvency. “We understand that IDBI has filed an application with the NCLAT [National Company Law Appellate Tribunal] challenging the NCLT order,” said Mishra.
The evolving jurisprudence of the Insolvency and Bankruptcy Code, 2016, was another factor for the AZB team. AZB advised the CoC and was represented by Mishra and fellow partners Suharsh Sinha and Hufriz Wadia.
“We assisted the CoC with verification of their overlapping security, analysed whether security had been perfected for each lender, liaised with the RP [resolution professional] on behalf of the CoC during the process, reviewed and negotiated the resolution plan on behalf of CoC and advised and assisted in some key litigations relating to trademarks,” said Mishra.