Canara Bank initiates Corporate Insolvency Resolution Process for Rs. 261.93 crore debt under IBC
In a significant ruling, the National Company Law Tribunal (NCLT), Mumbai Bench, has admitted an insolvency petition filed by Canara Bank against M/s. Krishna Showbiz Services Pvt. Ltd. The application, filed under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, seeks to initiate Corporate Insolvency Resolution Process (CIRP) for an outstanding debt of Rs. 261.93 crore.
Canara Bank, represented by Advocate Mr. Gajendra A Rajput, established that Krishna Showbiz Services Pvt. Ltd, a group company of Sri Adhikari Brothers Television Network Ltd, had defaulted on a term loan facility of Rs. 100 crore sanctioned in 2014. The corporate debtor, represented by Advocate Mr. Hrishik Gale, acknowledged the default and did not oppose the insolvency proceedings.
The tribunal, comprising Judicial Member Shri Nilesh Sharma and Technical Member Shri Sameer Kakar, observed that the corporate debtor had admitted its liability in its financial statements, which extended the limitation period as per Section 18 of the Limitation Act, 1963. The acknowledgment of debt in balance sheets from financial years 2017-2018 to 2023-2024 played a crucial role in the tribunal's decision to admit the application.
The tribunal declared a moratorium under Section 14 of the IBC, prohibiting the institution or continuation of suits against the corporate debtor, the transfer of assets, and recovery actions during the CIRP period. Essential supplies to the corporate debtor are mandated to continue uninterrupted.
The tribunal appointed Mr. Mayank Rameshchandra Jain as the Interim Resolution Professional (IRP) to oversee the CIRP, directing him to issue a public announcement and manage the insolvency resolution process in accordance with the Code. The tribunal also directed Canara Bank to deposit Rs. 3 lakh with the IRP to cover initial CIRP costs, with the amount to be reimbursed upon availability of funds from the Committee of Creditors.
This ruling marks a pivotal step in the resolution of financial distress for Krishna Showbiz Services Pvt. Ltd, as the CIRP aims to facilitate the restructuring of debt and potentially revive the company under the IBC framework.
Bottom Line:
Insolvency and Bankruptcy Code - Application under Section 7 of the IBC filed by Financial Creditor against Corporate Debtor - Admission of Corporate Insolvency Resolution Process (CIRP) based on establishment of debt and default.
Statutory provision(s): Section 7, Section 14, Section 13, Section 17 of the Insolvency and Bankruptcy Code, 2016; Section 18 of the Limitation Act, 1963
