Mumbai: NCLT issues Insolvency Resolution Process against Wizcraft as principal loan borrower fails to repay Rs 60 cr
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The National Company Law Tribunal (NCLT) on Monday admitted a petition filed by IDBI Bank Ltd. seeking to invoke Insolvency and Bankruptcy proceedings against Wizcraft International Entertainment Private Limited for failing to pay around Rs 60 crore, an amount, which the original loan borrower - Great Indian Nautanki Company Private Limited (GINCL) failed to pay.

The bank alleged that Wizcraft being the corporate guarantor to the loan it granted to GINCL had issued an "unconditional and unrecoverable" Corporate Guarantee by which it undertook to pay forthwith upon demand without any demur all amounts payable by the borrower - GINCL. The bank even issued proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, in this matter.

However, Wizcraft contended that it wasn't liable to pay any amounts as GINCL along with the bank had entered into an agreement with the Haryana Shahari Vikas Pradhikaran (HSVP) also known as Haryana Urban Development Authority, without it's (Wizcraft) consent. It claimed that the bank by a no-objection certificate in July 2019, freeing GINCL and making the new bidder (HSVP) responsible for the discharge of the said loan.

"In view of the fresh execution of NOC and arrangement between the bank, GINCL and HSVP. Hence, the guarantor‘s liability gets discharged. The bank has deliberately concealed the facts of this agreement," Wizcraft argued.

The NCLT Coram of Suchitra Kanuparthi, Member (Judicial) and V Nallasenapathy, Member (Technical), however, noted that Wizcraft in September 2017 responded to a letter of IDBI demanding the payment, had sought some time for the same.

"The Corporate Debtor (Wizcraft) has sought time which amounts to admission and acknowledgment of liability and also recorded the default of non-payment of money by the Principal Borrower (GINCL) thus the letter of September 2017, amounts of acknowledgment of liability," the NCLT held.

The NCLT further noted that the IDBI Bank has complied with all the provisions of the Insolvency and Bankruptcy Code and thus it's plea "deserved to be admitted."

The bench noted that the bank has proposed to issue Insolvency Resolution Process and has introduced name of one Vinit Gangwal as the Interim Resolution Professional.

"Having admitted the petition, the provisions of Moratorium as prescribed under the Insolvency and Bankruptcy Code, shall be operative henceforth with effect from the date of order, and shall be applicable by prohibiting institution of any Suit before a Court of Law, transferring or encumbering any of the assets of the Debtor etc," the coram said.

"However, the supply of essential goods or services to Wizcraft, shall not be terminated during Moratorium period. It shall be effective till completion of the Insolvency Resolution Process or until the approval of the Resolution Plan prescribed under the Code," the NCLT added.

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