The Statesman acquires insolvent news agency UNI for Rs 41.26 crore
The National Company Law Tribunal (NCLT), New Delhi, has approved the Rs 41.26-crore resolution plan submitted by The Statesman Limited for the debt-ridden United News of India, or UNI. The plan, which received 100% voting approval from the Committee of Creditors (CoC), aims to revive the second-largest news agency in the country.
Background
The Corporate Insolvency Resolution Process (CIRP) for UNI was initiated on May 19, 2023, following a petition filed by the United News of India Workers’ Union under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. The company, which had been facing financial distress due to the termination of subscriptions by major newspapers and the withdrawal of subsidies, was admitted into CIRP with Ms. Pooja Bahry appointed as the Resolution Professional (RP).
Key Highlights of the Resolution Plan
- Successful Resolution Applicant (SRA): The Statesman Limited emerged as the successful bidder after submitting a revised resolution plan, which was approved by the CoC with a 100% voting share.
- Total Claims Admitted: The total admitted claims stood at ₹125 crores, including ₹104.37 crores from employees and ₹16.52 crores from government dues.
- Payment to Creditors: The resolution plan proposes to pay ₹41.26 crores, which is approximately 32.86% of the total admitted claims. Secured financial creditors, including the State Bank of India (SBI), will receive ₹1.40 crores against their admitted claim of ₹2.17 crores. Employees will receive ₹23.33 crores, including ₹15.21 crores for gratuity dues.
- CIRP Costs: The SRA has committed to paying the entire Corporate Insolvency Resolution Process (CIRP) costs, estimated at ₹18.3 crores, upfront within 60 days of the plan’s approval. This includes a contingency fund of ₹5 crores.
- Gratuity Payments: The SRA has also assured that it will bear the entire liability for actuarial gratuity payments, ensuring that employees receive their dues in full.
Extension of CIRP Timeline
The CIRP timeline was extended beyond the initial 330 days due to the complexity of the case and the unique nature of UNI’s business. The CoC, led by SBI, cited the general elections and the Model Code of Conduct as reasons for the delay, as potential resolution applicants found it challenging to commit funds during this period. The CIRP was eventually extended until October 28, 2024.
Key Features of the Resolution Plan
- Capital Infusion: The SRA plans to infuse ₹3 crores into UNI within 60 days of the plan’s approval to improve business operations.
- Management Restructuring: The plan includes the formation of a new board of directors and the appointment of key managerial personnel to oversee the turnaround of the company.
- Operational Revamp: The SRA aims to revamp UNI’s wire services, expand news operations, and upgrade backend infrastructure to make the news agency commercially viable.
Monitoring Committee
A Monitoring Committee will be formed within seven days of the plan’s approval to oversee its implementation. The committee will include three representatives from the SRA, one representative from UNI’s employees, and one representative from the CoC. The RP will act as the Monitoring Agent but will not have voting rights.
Reliefs and Concessions
The SRA has sought several reliefs and concessions from the NCLT, including the waiver of statutory dues and the conversion of UNI from a Section 8 company to a private limited company. However, the NCLT clarified that the implementation of the resolution plan is not contingent on the approval of these reliefs.
NCLT’s Observations
The NCLT, while approving the resolution plan, emphasized that the scope of its examination was limited to ensuring compliance with Section 30(2) of the IBC. The tribunal also noted that the plan’s value exceeded the fair value of UNI’s assets, as assessed by the valuers appointed by the RP.
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