Deccan Chronicle insolvency process extended by 7 months

Hyderabad: The insolvency process of the trouble-hit Deccan Chronicle Holdings Limited (DCHL) is unlikely to be completed anytime soon with National Company Law Appelate Tribunal (NCLAT) extending the process by more than seven months on Friday.

NCLAT, headquartered in New Delhi, also directed Resolution Professional for DCHL to treat Srei Infrastructure Finance Limited as security creditor and allow it as Member of Committee of Creditors. This will also empower Srei Infra to vote in CoC meeting.

These directions are part of a judgement delivered by NCLAT on petition filed by Srei Infrastructure. Incidentally, Vision India Fund, a part of Srei Infrastructure Finance, emerged as the highest bidder for DCHL and a resolution plan before Hyderabad Bench of National Company Law Tribunal (NCLT). The case in NCLT will come up for hearing on Monday (July 23).

In its judgement in Srei Infra vs Canara Bank & others on Friday, two-member bench of NCLAT led by Justice S J Mukhopadhaya, Chairperson, said, “For the purpose of counting the total period of corporate insolvency resolution process (CIRP), the period of pendency of the appeal i.e. from 11th December 2017 till the date of this judgement be excluded. Once one or other resolution plan is approved, Resolution Professional will place the same before the Adjudicating Authority (NCLT) for its order under Section 31 (of IBC).” 

With the judgement delivered on July 20, the total period to be excluded comes to around seven months and nine days. As this period had been excluded from process by the appellate tribunal, the process will automatically be extended by the same period.

The insolvency proceedings of DCHL began under Insolvency and Bankruptcy Code (IBC) in July 2017 following a petition filed by Canara Bank. The initial deadline for completing the process was 270 days which was later extended by another 87 days to 357 days. The latest NCALT order came as breather for the DCHL as the extended deadline also ended on July 10 by which time CoC failed to approve any resolution plan. Now, the deadline will be extended by another seven months. 
“This is the longest period a resolution process has got under IBC in the country so far,” a legal professional said.

Srei Infrastructure knocked NCLAT doors on December 11 last year after Resolution Professional rejected its plea that it should be treated as secured creditor and made part of CoC. Hyderabad Bench of NCLT upheld the RP’s decision. The issue pertains to Rs 240 crore that DCHL borrowed from the Kolkata-based company. The media house defaulted on the repayment. Consequently, a part of the debt was converted into equity following an order from Debt Recovery Tribunal-1 of Kolkata in December 2014. As result of this conversion, Srei Infra got nearly 30 per cent stake in DCHL, which it still holds.

Srei Infrastructure approached RP to include as security creditor after insolvency proceedings launched against DCHL as it did not recover entire amount it gave to DCHL. RP refused to entertain its plea, citing its stake in the company. Now, NCLAT ruled in favour of Srei.