Bombay : The television distribution landscape is becoming more complicated day by day with the rapid evolution of video consumption and the yo-yo of tariff regulations by the Telecom Regulatory Authority of India (Trai). The carcasses of the leaders of cable television distribution line the streets of Indian television country. A leader in Kolkata for many years, Manthan has faced challenges with its debts and rising dues which have forced its leaders to drop the ghost as well as a nudge from regulators.
The debtor company, Manthan Broadband Services, faced a financial crisis, bankruptcy and difficulty repaying its debts to creditors. Therefore, the liquidation of the Manthan is currently becoming a growing concern. Since the 2019 financial year, there has been no commercial activity of the debtor company and no regular employees work in the company.
Sony Pictures Networks India moves the High Court
Sony Pictures Networks moved to the High Court in Kolkata and in January it won an order directing the National Company Law Tribunal (NCLT) to hear the corporate insolvency resolution case of Manthan and make an appropriate order within three months. Sony, Alliance Broadband (another Manthan creditor) and Kuldeep Verma (currently Manthan’s appointed liquidator) have consistently opposed an attempt to submit a resolution plan to revive Manthan. The long-outstanding Manthan case was finally settled with the NCLT passing an order on April 6, 2022 ordering the liquidation of Manthan.
Additionally, Sony Pictures is the only broadcaster to have secured title to three acres of land as collateral from Manthan under a watertight memorandum of understanding. This is the first time that a broadcaster has used such a method to secure its rights. By the way, this is probably the first time an Indian broadcaster has thought of such an idea of using real estate as collateral to secure financial arrears.
This could be described as a positive development for the broadcaster as it can now manage the said part of the Manthan plot of land under the relevant provisions of the Insolvency and Bankruptcy Code (IBC).
The guarantee will help the broadcaster obtain “secured operating creditor” status which was granted by the NCLT in January 2021. The first judgment of its kind in the entire broadcasting industry. Operational creditors do not benefit from the status of secured creditor for lack of security; no other broadcaster has ever taken warranty in this industry.
The Manthan Case Timeline
On March 8, 2021, an order was first passed by the NCLT that Manthan should be liquidated. The decision to liquidate the Distribution Platform Operator (DPO) was made by NCTL after various opportunities given to the company to produce a resolution plan. Manthan was subject to insolvency proceedings on September 18, 2019 and the Corporate Insolvency Resolution Process (CIRP) was initiated after the financial creditor, Alliance Broadband Services, filed a petition before the court to claim an overdue loan amount of more than Rs 10.20 crore.
In addition, two parties, Atria Convergence Technologies Ltd (ACTL) and India Cable Network Company Ltd (ICNCL), have expressed interest in submitting the resolution plan for the debtor company. However, both bidders withdrew from the CIRP after submitting a resolution plan.
The Creditors’ Committee (CoC) passed a resolution for the liquidation of Manthan and Kuldeep Verma, so the resolution professional had filed the appropriate applications with the NCLT. The matter was further discussed at the 10th CoC meeting in March 2021 and finally, at the 11th CoC meeting, the decision to liquidate Manthan was approved after obtaining 100% creditor votes.
The industry spokesperson said that they have been waiting for Manthan CIRP to work for a long time. However, even after all efforts, Manthan’s revival plan could not happen on schedule, including seeking extension and exclusion.
So now, with the court’s passing of the order for Manthan’s liquidation process, creditors expect it to streamline everything and make it easier to collect pending dues from the debtor company.