Anil Ambani’s Reliance Media Works to face insolvency proceedings

The National Company Law Tribunal (NCLT), Mumbai Bench, has ordered the initiation of the Corporate Insolvency Resolution Process (CIRP) against Reliance Media Works Limited.

The petition was filed by Netizen Engineering Private Limited (formerly Reliance Infocomm Engineering Private Limited) on November 20, 2024, under Section 7 of the Insolvency and Bankruptcy Code, 2016, citing a default amount of Rs 6 crore. The stated date of default was July 1, 2024.

According to the petitioner, a loan of up to Rs 150 crore was extended to Reliance Media Works Limited through an agreement dated May 23, 2011. The loan was to be repaid within two years with an interest rate of 10.50% per annum. Disbursements were made in two tranches: Rs 100 crore on May 23, 2011, at 10.5% interest, and Rs 20 crore on December 30, 2011, at 12% interest.

While Reliance Media Works allotted preference shares worth ₹120 crores on March 31, 2012, against the principal loan amounts, they failed to pay the interest of ₹5,46,73,145 due on the same date.

Netizen Engineering Private Limited issued a formal demand letter on January 2, 2024, for Rs 12,36,39,947, including outstanding dues and accrued interest. Reliance Media Works acknowledged the outstanding dues on February 7, 2024, and requested an extension. Following a subsequent demand letter on February 29, 2024, Reliance Media Works proposed a one-time settlement (OTS) of ₹6,00,00,000/- on March 15, 2024. This OTS was agreed upon in a Term Sheet dated April 1, 2024, with payments structured in four equal quarterly installments of ₹1.50 crore each, starting June 30, 2024.

However, Reliance Media Works defaulted on the first installment, establishing the default on July 1, 2024. A demand notice was issued by the financial creditor on July 4, 2024, and the corporate debtor acknowledged the debt but cited financial constraints in a letter dated July 12, 2024.

Reliance Media Works Limited contended that the petition was non-maintainable, arguing there was no subsisting financial debt or legally enforceable default. While acknowledging a liability of Rs 6 crore, they stated this amount was offered as a full and final settlement. They also argued that the initial principal loan amount was satisfied by the allotment of Compulsorily Convertible Preference Shares (CCPS) in 2012. The default, they claimed, was due to unforeseen factors like adverse market conditions and economic downturn, not mismanagement, and sought a three-year repayment period.

The NCLT, in its analysis, confirmed the existence of a “Financial Debt” of ₹6,00,00,000/- as defined under Section 5(8) of the Code, noting that the interest component is part of financial debt and the OTS amount crystallized the disputed amount. The Tribunal referenced the NCLAT judgment in Base Realtors Pvt. Ltd. Vs Grand Realcon Pvt. Ltd. to support that non-payment of interest constitutes a default.

Furthermore, the NCLT upheld that a company petition can be filed based on a promise to pay, referencing the Supreme Court judgment in Kotak Mahindra Bank Ltd v. Kew Precision Paris Pvt. Ltd.

Given that the petitioner fulfilled all requirements under Section 7 of the Code, including the existence of financial debt, default, and the amount exceeding the threshold limit, the NCLT admitted the petition. NPV Insolvency Professionals Private Limited has been appointed as the Interim Resolution Professional (IRP), and the petitioner is directed to deposit ₹4 Lakhs towards initial CIRP costs.

Reliance MediaWorks is a Media & Entertainment (M&E) company, with presence across several businesses including theatrical exhibition of films, film and media services and television content production and distribution. Headquartered in Mumbai, India, Reliance MediaWorks has operations across 78 cities and towns in India and internationally in the United Kingdom and the United States.

The Company has comprehensive presence in Film and Media Services: Motion Picture Processing and DI; Film, Audio Restoration and Image Enhancement; 3D; Digital Mastering: Studios and Equipment rentals; Visual Effects; Animation; Broadcast, TVC Post Production & Feature Film Promotion services with presence across India, USA and UK and offers end to end integrated services across the entire film and media services value chain to production houses, studios and broadcasters, globally.

Reliance MediaWorks operates a cinema chain under the brand ‘BIG Cinemas’ across India and the United States with over 430 screens (as on January 1st2014) & catered to approximately 35 million customers annually.

Reliance MediaWorks offers end-to-end integrated services including Production, Post Production and Media & Creative Services to production houses, studios and broadcasters.

Reliance MediaWorks is also engaged in the business of television content production through our subsidiary, Big Synergy Media Limited, under the brand “BIG Synergy”, which primarily produces non-fiction shows in addition to adapting international programming formats for Indian viewers.

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