Pioneer Channel Factory files for its own insolvency under Section 10 of IBC

Pioneer Channel Factory, a Mumbai-based company, has filed for the initiation of its Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code (IBC), 2016. The National Company Law Tribunal (NCLT), Mumbai Bench, has admitted the petition and ordered the commencement of the CIRP.

Background of the case

Pioneer Channel Factory Private Limited, incorporated in 1994, was engaged in the business of broadcasting through agreements with Entertainment Television Network Private Limited and Lambas Entertainment Ltd. These companies held the broadcast airtime distribution rights for satellite music channels MTunes and Music Xpress. However, the non-renewal of uplinking and downlinking licenses by the Ministry of Information and Broadcasting in 2017 severely impacted the company’s operations, rendering it non-functional.

Financial struggles

The company has been facing a severe liquidity crunch, with outstanding debts amounting to ₹22.6 crore (excluding interest) owed to financial creditors. Additionally, the company has unpaid statutory dues, including Provident Fund, Professional Tax, and Labour Welfare Fund, totaling ₹2.25 crore. The company is also under investigation by the CGST & Central Excise Department and the Income Tax Department, further complicating its financial situation.

Refund claims

Pioneer Channel Factory has claimed a refund of ₹67,96,175 from the Income Tax Department under the Minimum Alternate Tax (MAT) credit provision. Despite multiple representations, the refund has not been processed. The company also claims that ₹47,25,288 is due from various statutory authorities, which remains unpaid despite several requests.

CIRP initiation

The company’s Board of Directors, in a meeting held on February 3, 2024, authorized Mr. Yogesh Radhakrishnan, a director of the company, to take necessary steps to initiate the CIRP. A special resolution was passed by the shareholders in an Extra-Ordinary General Meeting on November 9, 2024, approving the initiation of the CIRP.

Appointment of interim resolution professional

Bharati Manoj Daga has been appointed as the Interim Resolution Professional (IRP) to oversee the CIRP. The IRP will carry out functions as per the provisions of the IBC, including managing the company’s operations during the resolution process.

Moratorium declared

The NCLT has declared a moratorium under Section 14 of the IBC, effective immediately. This moratorium prohibits the institution or continuation of legal proceedings against the company, the transfer of its assets, and the enforcement of any security interest. However, the supply of essential goods and services to the company will continue uninterrupted during this period.

Next Steps

The IRP will make a public announcement of the CIRP and invite claims from creditors. The company has been directed to deposit ₹1,50,000 with the IRP to cover initial expenses, including the issuance of public notices. The management of the company will now vest in the IRP, and all officers and managers are required to provide necessary documents and information to the IRP within a week.

Conclusion

The admission of Pioneer Channel Factory’s petition marks a critical step in addressing its financial distress. The CIRP aims to resolve the company’s insolvency by either approving a resolution plan or proceeding with liquidation, depending on the outcome of the process. The case will be closely watched by stakeholders in the broadcasting and financial sectors as it unfolds.

For further information, please contact:

Mrs. Bharati Manoj Daga
Interim Resolution Professional
Email: bharteedaga1008@gmail.com
Registration No. IBBI/IPA-001/IP-P-01963/2020-2021/13070

Also See: NCLAT upholds penalty against Santoshi Finlease for malicious insolvency petition