A section of the committee of creditors (CoC) of the beleaguered Deccan Chronicle Holding Limited (DCHL) is wary over the alleged behind-the-scenes attempts by the company’s promoters to stage a backdoor entry, as the media group is all set to change hands through the ongoing insolvency proceedings of the National Company Law Tribunal (NCLT). As per the original version of Insolvency and Bankruptcy Code 2016, the promoters of a bankrupt company were barred from participating in the restructuring of assets process, however, the subsequent amendments made some concessions to the owners to join the bids process, if it helps rescue the company. In case of DCHL, the promoters face a clutch of criminal cases and CBI probe too.
Inordinate delay in completion of the process to find new owners or management and the entry of new players as guaranteed creditors claiming charge on the assets of the bankrupt company and the inability of the Insolvency Resolution Professional (IRP) raise scope for suspicion that the present promoters are still trying to regain control over their company after enjoying a massive haircut on their debts.
A chief officer of a public sector bank that lent around Rs 280 crore to DCHL that runs the Deccan Chronicle English daily newspaper, among a few other publications across the country, told Sources on Friday that the happenings in the last few weeks give room for doubt about some foul play and the same would be discussed at the forthcoming CoC meet.
DCHL owners T. Venkattram Reddy and his brother T. Vinayak Ravi Reddy have maintained that the company still generates reasonably well cash collections through advertising revenues of the newspapers that owe around Rs 6,500 crore to many banks and other financial institutions, besides facing criminal charges of forgery, fraud, wilful default, etc.
As none of the bidders who had submitted their filled in documents of the IRP Mamata Binani are learnt to have quoted the price that covers the total debt of DCHL, it is obvious that the CoC is set to take a substantial haircut (in simple language foregoing their money).
The highest bidder, according to sources, is believed to have quoted a price around Rs 850 crore to acquire the 80-year-old media company.
As per the original schedule drawn up by the insolvency proceedings launched by the public sector Canara Bank, which leads the 18-member CoC, the process of finding a new management and owners should have been completed within 180 days, by 12 April 2018. However, due to some technical delays, the process has been extended by another 80 days, to 10 July.
However, the Hyderabad bench of NCLT, which is hearing two more petitions seeking the status of secured creditors in the case, posted the case till 17 July, well beyond the deadline to complete the process.
The two petitioners, Karvy Financial Services Limited and Sujana Trading Company, both Hyderabad-based, have sought to be involved in the restructuring of DCHL assets.
Already, a similar outsider of CoC, India Bulls, which lent around Rs 174 crore to DCHL and auctioned the residential properties of the Reddys, too, petitioned the NCLT and was granted permission to become a secured creditor in the case.
At least two bankers—one private and a public sector one—are planning to raise certain issues before the creditors’ meet next week on the twists and turns in the case over the last six months. For example, these bankers are shocked over the sudden resignation of the counsels of IRP who argued against Karvy and Sujana being clubbed into the creditors’ list before the NCLT.
The abrupt exit of the counsels gives scope that they must have been pressurised by some forces—presumably the present promoters—to delay the process and thus scuttle the process of restructuring by handing over the company to new owners.
These bankers are expected to take along all other members of CoC in minimising the haircut as well as keeping away the present promoters’ criminal charges.
Source: July 7, 2018, The Sunday Guardian