Sony welcomes NCLT order to start Manthan's liquidation process

Sony welcomes NCLT order to start Manthan's liquidation process

The pendent matter of Manthan was finally put to rest on 6 April by NCLT.

Sony welcomes NCLT

MUMBAI : The television distribution landscape is getting treacherous day by day with the rapid evolution of video consumption and the yo-yoing of pricing regulations by the Telecom Regulatory Authority of India (Trai). Carcasses of the leaders in the Cable TV distribution are lining the streets of India’s television land. A leader in Kolkata for many years, Manthan has been facing challenges with its mounting debts and dues that have forced its managers to give up the ghost as well as a nudge from the regulators.

The corporate debtor, Manthan Broadband Services has been facing a financial crunch, bankruptcy, and challenges in repaying its debts to the creditors. Therefore, the liquidation of the Manthan is becoming a growing concern currently. Since the financial year 2019, there have been no business operations of the corporate debtor and no regular employees are working in the firm.

Sony Pictures Networks India moves high court

Sony Pictures Networks moved to the Kolkata high court and in January, it obtained an order directing National Company Law Tribunal (NCLT) to hear Manthan’s corporate insolvency resolution matter and pass an appropriate order within three months. An attempt to submit a resolution plan to revive Manthan was persistently opposed by Sony along with Alliance Broadband (another creditor of Manthan) and Kuldeep Verma (the appointed liquidator of Manthan currently). The long-pending Manthan matter finally was put to rest with NCLT passing an order on 6 April 2022 directing the liquidation of Manthan.

Further, Sony Pictures is the only broadcaster that got the title deeds of three acres of land as collateral from Manthan under a watertight memorandum of understanding (MoU). It is the first time that any broadcaster used such a method to secure their dues. Incidentally, it is probably the first time that an Indian broadcaster had thought of such an idea of using real estate as collateral for securing outstanding financial dues.

This could be described as a positive development for the broadcaster since it can now deal with the said portion of Manthan’s land parcel under the relevant provisions of the Insolvency and Bankruptcy Code (IBC).

The collateral will help the broadcaster to gain the 'Secured Operational Creditor' status which was granted by the NCLT in January 2021. The first of its kind judgement in the entire broadcasting industry. The operational creditors are not given secured creditor status due to lack of collateral; no other broadcaster has ever taken any collateral in this industry.

The Manthan case chronology

On 8 March 2021, an order was first passed by the NCLT that Manthan should be liquidated. The decision to liquidate the Distribution Platform Operator (DPO) was taken by NCTL after various opportunities given to the company for producing a resolution plan. Manthan has undergone the insolvency proceedings on 18 September 2019 and the corporate insolvency resolution process (CIRP) was initiated after the financial creditor, Alliance Broadband Services had filed a petition in the court for claiming a defaulted loan amount of more than Rs 10.20 crore.

In addition, there were two parties Atria Convergence Technologies Ltd (ACTL) and India Cable Network Company Ltd (ICNCL) who expressed their interest in submitting the resolution plan for the corporate debtor. However, both the bidders withdrew from CIRP after submitting a resolution plan.

The committee of creditors (CoC) passed a resolution for winding up Manthan and Kuldeep Verma, the resolution professional had accordingly filed appropriate applications before the NCLT. The issue was further discussed during the 10th CoC meeting in March 2021 and ultimately, in the 11th CoC meeting, the decision to liquidate Manthan was approved after casting 100 per cent votes from the creditors.

The industry spokesperson said that they have waited for a long time for the smooth running of the CIRP of Manthan. However, even after best efforts, the revival plan for Manthan could not happen within the timelines, including seeking extension and exclusion.

So now, with the passing of the order by the tribunal for Manthan’s liquidation process, the creditors expect that it will streamline everything and facilitate recovering the pending dues from the corporate debtor.