The National Company Law Appellate Tribunal (NCLAT) on April 18 set aside the corporate insolvency resolution process against Sporta Technologies, parent company of leading fantasy gaming platform Dream 11 and restored it to its pre-insolvency stage.
The NCLAT held that the National Company Law Tribunal (NCLT) could not have admitted the company to insolvency as the plea was time barred. The appellate tribunal has asked the company to pay the Resolution Professional (RP) the costs that have been incurred to keep the company running from February 9 to now.
The NCLAT, on February 14, stayed the NCLT Mumbai bench order to initiate a corporate Insolvency Resolution Process (CIRP) against Sporta Technologies, doing business as Dream 11. It had stayed the NCLT order over an urgent petition moved by Dream11 co-founder and COO Bhavit Sheth.
The NCLT had directed to initiate CIRP against Dream 11 over a petition filed by its operational creditor Reward Solutions under section 9 of the Insolvency & Bankruptcy Code (IBC), claiming dues of Rs 7.61 crore. It had also appointed Madan Bajrang Lal Vaishnawa as IRP for Sporta Technologies.
In 2019, a license agreement was executed between Reward Business Solutions, the licensor, and Sporta Technologies. It had leased a premise in Mumbai for five years to Sporta Technologies for which terms of payment were defined. However, it received a demand note of Rs 7.61 crore on April 20, 2021, for a period of March 27, 2020, till April 2021.
However, it received a demand note of Rs 7.61 crore on April 20, 2021, for a period of March 27, 2020, till April 2021. Opposing the demand, Sports Technologies, in the petition filed before the appellate tribunal, said the NCLT, in its order, ignored the fact that the demand ”period from March 27, 2020, to March 26, 2021, is squarely covered/exempted under Section 10A of the Insolvency and Bankruptcy Code, 2016”.
Section 10A mandates no application for initiation of a corporate insolvency resolution process (CIRP) can be filed against any debtor by any financial and operational creditor for any default arising on or after March 25, 2020, for a period of one year. This was a special provision inserted by the government in the IBC to help the companies after the economic activities had resumed post-lockdown in phase.
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