Nazara Technologies acquires Smaaash Entertainment for Rs 126 crore

The National Company Law Tribunal (NCLT), Mumbai Bench, has approved Nazara Technologies Limited’s ₹126 crore resolution plan to acquire debt-laden Smaaash Entertainment Private Limited, marking a significant step in the gaming and entertainment firm’s insolvency resolution process. The plan, approved by the Committee of Creditors (CoC) with 99.59% votes, ensures Smaaash’s revival under Nazara, a leading gaming and sports media conglomerate.

Background
Smaaash Entertainment, an MSME known for its sports-themed entertainment centers, was admitted into Corporate Insolvency Resolution Process (CIRP) in May 2022 following a petition by Edelweiss Asset Reconstruction Company (ARC), its largest financial creditor. Bhrugesh Amin, the Resolution Professional (RP), oversaw the CIRP, which saw multiple rounds of bidding and legal challenges.

Resolution Plan Highlights
Nazara’s resolution plan, valued at ₹126 crore, surpasses Smaaash’s liquidation value of ₹65.77 crore, offering creditors a higher recovery. Key features include:

• Secured Financial Creditors: Receiving 29.27% of admitted claims (₹124.47 crore).
• Operational Creditors: Government dues to be paid 2.97% (₹58 lakh), while other operational creditors get 1.79% (₹28 lakh).
• Employees: Full settlement of ₹44.22 lakh in dues after tribunal intervention.
• Unsecured Creditors: Sadhana Nitro Chem, the sole unsecured creditor, receives nothing.

The plan also covers insolvency process costs (₹97.76 lakh) and includes a ₹20 crore performance guarantee by Nazara Technologies.

Legal Challenges and Rejections
Suspended directors of Smaaash attempted to submit a ₹200 crore revival proposal but were barred under Section 29A of the Insolvency and Bankruptcy Code (IBC) due to prior fraudulent transactions. The NCLT upheld their ineligibility, citing orders against them for undervalued asset transfers to related entities.

Implementation and Oversight
A Monitoring Committee comprising representatives from Nazara, financial creditors, and the RP will supervise the plan’s execution. Nazara Technologies, with a net worth of ₹1,316 crore (as of March 2023), will fund the resolution through internal accruals and investments. The tribunal mandated regulatory fees (0.25% of realizable value) to be paid to the IBBI, given the plan’s higher value over liquidation.

Implications
The approval ends a three-year insolvency saga, allowing Smaaash to resume operations under Nazara’s management. The tribunal emphasized compliance with the Supreme Court’s stance on CoC’s commercial wisdom and extinguishing claims not part of the resolution plan.

Nazara’s acquisition aligns with its strategy to expand into experiential entertainment, leveraging Smaaash’s brand and infrastructure. With legal hurdles cleared, stakeholders anticipate swift implementation to revive the once-popular entertainment chain.

Also See: NCLT approves Rs 362.5 crore resolution plan for RG Residency