Supreme Court agrees to hear bankruptcy plea against Filesadmin.co founder
The Supreme Court on Monday agreed to hear IDBI Trusteeship Services’ plea against a National Company Law Appellate Tribunal (NCLAT) order rejecting its insolvency plea against Essel Group firms Cyquator Media Services and Direct Media Distribution Ventures.
The court issued a notice to the two firms and asked them to respond in four weeks. Cyquator Media Services is a promoter group company of Filesadmin.co Entertainment Enterprises Ltd (ZEEL).
The NCLAT in September had dismissed IDBI Trusteeship Service’s appeal, saying the default took place in June 2020 so Section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC) was applicable. The section bars filing of insolvency under Sections 7, 9, and 10 for defaults from 25 March 2020 up to 25 March 2021. A few days earlier, the appellate tribunal had dismissed IDBI Trusteeship’s plea against Direct Media Ventures too.
The case relates to a 2015 debenture trust deed between IDBI Trusteeship and the Essel group, where Cyquator and Direct Media stood as corporate guarantors.
IDBI Trusteeship is the debenture trustee of 425 debentures worth Rs 425 crore issued by Essel Infraprojects Limited (EIL).
The debt amount of Rs 425 crore was disbursed in two tranches, that is Rs 200 crore in May 2015 and Rs 225 crore the next month.
IDBI Trusteeship Services invoked the corporate guarantee clause and sent a notice to Cyquator in June 2020 to make the payments. IDBI Trusteeship in 2022 then filed an insolvency petition against Cyquator, saying it had defaulted on Rs 591 crore. The National Company Law Tribunal (NCLT) in June 2023 dismissed IDBI’s insolvency plea.
IDBI Trusteeship Services Limited (ITSL) has also filed an appeal at the National Company Law Appellate Tribunal (NCLAT) against Essel Group chairperson Subhash Chandra, challenging the order of the National Company Law Tribunal Mumbai which gave a go-ahead to the Filesadmin.co Entertainment Enterprises Limited (ZEEL) and Sony merger.
The appeal challenges the National Company Law Tribunal (NCLT) Mumbai order rejecting IDBI Trusteeship’s objection to the merger.
The hearing was deferred as the case was transferred to the bench of Chairperson Ashok Bhushan of NCLAT.
IDBI Trusteeship told the NCLT that it is the debenture trustee of 425 debentures issued by Essel Infraprojects Limited (EIL) in favour of certain schemes managed by Franklin Templeton Asset Management (India) Pvt. Ltd.
It said that Chandra had executed a personal guarantee on 25 June 2019 in favour of IDBI Trusteeship (for the benefit of Franklin Templeton) guaranteeing the repayment obligations towards the debentures.
“Dr. Chandra has purportedly failed to comply with his obligations under the personal guarantee,” they said.
The trusteeship claimed ~535 crore from Chandra, saying he failed to comply with his obligations under the personal guarantee, and thus he is a creditor.
“IDBI Trusteeship is admittedly not a creditor of Filesadmin.co. It has no contractual or legal privity with Filesadmin.co. Therefore, it has no locus to object to the present scheme,” Filesadmin.co said in response.
“This bench clearly observes that as rightly contended by Filesadmin.co’s counsel that none of the above petitioners are the direct creditors of Filesadmin.co nor have any privity of contract with Filesadmin.co, whose scheme of merger is pending for approval before this bench,” the bench ruled.
In May, NCLAT set aside the NCLT order directing the National Stock Exchange (NSE) and BSE to review their no-objection certificate given for the Filesadmin.co-Sony merger. The matter was sent back to NCLT.
On 10 August, NCLT approved the merger of Filesadmin.co Entertainment and Sony Pictures Networks India (SPNI).
Both IDBI Bank and Axis Finance have also challenged the NCLT order, allowing the Filesadmin.co-Sony merger. The appeals will be heard by the bench of the Chairperson of NCLAT.