The National Company Law Appellate Tribunal (NCLAT) has rejected two petitions challenging the resolution plan submitted by Sapphire Media Limited for the Reliance Broadcast Network Limited, which owned and operated popular radio channel Big FM.
The order was passed by the coram of NCLAT Chairperson Justice (retd) Ashok Bhushan and Technical Member Barun Mitra on December 23, while dismissing the appeals filed by two unsuccessful resolution applicants, alleging material irregularity in the process adopted by the Resolution Professional.
Upholding the decision of NCLT Mumbai to approve the resolution plan submitted by Sapphire Media, the Corum observed that the challenge mechanism as well as negotiation conducted by the Resolution Professional were in accordance with the CIRP Regulations and Process Note.
No irregularity was committed by the Resolution Professional in evaluation of eligibility of the SRA, noted the Tribunal.
It said no tenable ground was raised within the meaning of Section 61(3)(ii) of the Insolvency and Bankruptcy Code, 2016, to interfere with the order approving the Resolution Plan.
Reliance Broadcast Network Limited, a part of the Anil Ambani arm of the Reliance group, was admitted to the Corporate Insolvency Resolution Process (CIRP) in February 2024 following an application by IDBI Trusteeship Services Limited.
The resolution process saw several interested parties submit bids, including Abhijit Realtors & Infraventures Private Limited, Creative Channel Advertising & Marketing Private Limited and Entertainment Network India Limited (Radio Mirchi).
The bid of Sapphire Media, offering Rs 261 crore, was accepted by the Committee of Creditors (CoC), surpassing other proposals including Rs 240 crore from Creative Channel and Rs 248 crore from a consortium led by Abhijit Realtors.
The CoC approved Sapphire’s plan with an overwhelming majority of 88.97 percent during a vote held on November 16, 2023.
In May 2024, the National Company Law Tribunal approved the resolution plan submitted by the company.
Abhijit Realtors and Creative Channel had initially filed an application challenging the selection of Sapphire as the Successful Resolution Applicant (SRA), and the approval resolution plan.
The NCLT dismissed this application prompting them to file an appeal before the NCLAT.
The companies challenged various aspects of the bidding process, alleging irregularities and questioning the eligibility of Sapphire Media as a resolution applicant.
Abhijit Realtors argued that the entire challenge process conducted by the Resolution Professional was in violation of the CIRP Regulations of 2016, emphasizing that their consortium had been unfairly excluded despite submitting a higher bid than the initial highest bid.
Creative Channel’s counsel echoed these sentiments, asserting that Sapphire Media was ineligible to submit its Resolution Plan, and called for a fresh examination of all existing qualified proposals.
Having found no infirmity or infraction of law in the challenge process (bidding process), the NCLAT dismissed allegations that it was not conducted as per the CIRP regulations.
The Tribunal held that the CoC was fully competent to conduct Negotiation Process for value maximisation after completing the Challenge Process which Negotiation Process was conducted in accordance with RFRP and Process Note.
It also dismissed the contention that Sapphire was not eligible to partake in the bidding as it did not have the requisite turnover.
It said the SRA was eligible to submit a Resolution Plan. The net worth and turnover of the promoter Sahil Mangla could be included for purposes of net worth of a group it being entity within the meaning of Clause 3 of Invitation for Expression of Interest, it added.
The NCLAT upheld the resolution plan submitted by Sapphire Media.