NCLT approves Marvel Media-led consortium’s Rs 55-crore resolution plan for SAB TV Network

The NCLT has approved the plan submitted by the consortium of SAB Events & Governance Now Media Ltd, Marvel Media Pvt Ltd, Ravi Adhikari and Kailasnath Adhikar for the resolution of Shri Adhikari Brothers Television (SAB TV) Network corporate insolvency resolution process.

The resolution plan was earlier approved by the committee of creditors by a vote share of 93.5%. The resolution plan provides for a Rs 14 crore fund infusion by the successful resolution applicant. The plan also provides for payment of Rs 55 to secured creditors within 30 months from the approval of the resolution plan. The company owed a total of Rs 504 crore to secured financial creditor. For unsecured financial creditor, the plan provides for Rs 10 lakh against their total claims of Rs 136 crore.

The resolution plan also provides for Rs 1.6 crore as insolvency cost. A sum of Rs 10 lakh has been set aside for payment to operational creditors.

Dissenting Financial Creditors, who do not vote in favour of the resolution plan, will receive payment that is not less than the amount to be paid to such creditors in accordance with sub section (1) of Section 53 of the Insolvency & Bankruptcy Code 2016 in the event of a liquidation of the Corporate Debtor. However, for ample clarity it is stated that the sum total of the resolution amount proposed to the financial creditors in this resolution plan shall not increase or change or be different under any circumstance and the total resolution amount for the financial creditors will remain same even if there are one or more dissenting financial creditor.

Opposition to the resolution plan

The NCLT while approving the resolution plan also addressed the dispute raised by the Central Bank of India, one of the secured financial creditors.

Central Bank of India had opposed the resolution plan on the following grounds:

• The resolution plan cannot provide for extinguishment of Personal Guarantees
• The corporate Debtor – SAB TV Network — cannot take benefit of Section 240A as it received MSME registration on 13 October 2020 while CIRP was initiated against it on 20 December 2019.
• The plan is also hit by Section 29A(j) because resolution applicants Ravi Adhikari and Kailashnath Adhikari are sons of the Ex-directors of Corporate Debtor. Hence, they are related parties.  
• The plan is hit by Section 29A(b) & (d) as the account of CD has been declared as fraud under RBI Master Circular dated 1 July 2016 by State Bank of India and Canara Bank
• The claims of the Applicant admitted by the IRP is Rs. 504.03 crores whereas the plan value offered to the Applicant is only Rs. 54 crores and the haircut for the applicant is 89.28%. Such plan which is only to give benefit to the promoters should not be allowed

On the extinguishment of Personal Guarantees, the NCLT said it is clear that when CoC has passed a resolution plan with 93.5% votes after deliberating on the plan and such plan provides for extinguishment of personal guarantee, the Adjudicating Authority cannot interfere with the commercial wisdom of COC. Hence, this ground of objection of the Applicant is rejected.

On the issue that SAB TV cannot be classified as MSME, the NCLT said there is no bar under the Code in obtaining MSME registration certificate by the Corporate Debtor after the initiation of CIRP.

On the contention that SAB TV was declared fraud by RBI, the NCLT aid that Clause (b) of 29A creates bar on submitting the resolution plan, on any person who is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India. “Going by the legislative language, it is clear, that bar is on the resolution applicant. In the present case the persons submitting the resolution plan have not been declared as wilful defaulter. Any other interpretation of section 29A(b) will be a violence to the plain language of the statute,” notes the NCLT.

On the contention that resolution applicants Ravi Adhikari and Kailashnath Adhikari are related parties, NCLT says that due to exemption under Section 240A, they are not ineligible to submit a resolution plan as the Corporate Debtor has been registered as MSME.

On the resolution plan offering only Rs 55 crore against Rs 504 crore claims of financial creditors, the tribunal says that since the resolution plan has been approved by the committee of creditors, it cannot question the commercial wisdom of the same.

Also See: NCLT nod to BTL EPC’s resolution plan for McNally Bharat Engineering