Deccan Chronicle resolution professional admits Rs 78.60 bn loan due claims

Lenders, as well as prospective suitors of the Deccan Chronicle Holdings Limited (DCHL), may have to take a tough call on outstanding loan dues of a whopping Rs 78.60 billion before proceeding with a possible insolvency resolution plan as the liabilities of the debt-laden media company seems far outsize its assets and income by any measure.

Resolution professional (RP) Mamta Binani has admitted loan dues of Rs 78.60 billion, which include a claim of Rs 77.02 billion from 31 financial creditors and Rs 1.5 billion from 16 operational creditors in an ongoing insolvency resolution process initiated against DCHL by Hyderabad-bench of National Company Law Tribunal (NCLT) in July last year. The RP has disallowed the loan claims amounting to Rs 30 billion.

Canara Bank had filed an application in May 2017 requesting the tribunal to initiate insolvency resolution against the company.

Total eight entities, including two big media houses- Times Group and HT Media- had filed expressions of interest (EoI) in the company's resolution process over a month ago. None of them was yet to respond to an April 20 notification through which the RP has invited prospective suitors to submit their resolution plans by April 27, sources told Business Standard.

Names of other entities that had filed EoIs are Srei Infra, Essel Group, Adoniss, iLabs, ARCIL and Asianet.

In 2012, the DCHL management for the first time told its shareholders that it was in deep debt of around Rs 40 billion loans after the lenders started approaching various legal fora to recover their loan dues from the company. 

Later in 2014 Canara Bank filed a complaint with Central Bureau of Investigation (CBI) against the management when the forensic audit failed to trace the entry of the loans and their utilisation in the company books. The interest costs of the last five years have further added to the liabilities of the Hyderabad-based media company.

Owner of popular English daily, Deccan Chronicle, and a Telugu newspaper Andhra Bhoomi besides a couple of other publications, DCHL had earned a revenue of Rs 3.4 billion in 2015-16, Rs 3.06 billion in 2016-17 and Rs 2.30 billion during the first three quarters of the financial year 2017-18.

In 2011-12, the year before the company's financial problems became public, DCHL had reported a revenue of Rs 8.43 billion and a net loss of Rs 10.40 billion.

The lenders will have no choice but to get prepared for a sharp haircut if they chose to pursue the insolvency resolution considering the current revenues and profits as well as the value of the company's assets, which are mired in unending litigations, sources said.

 It had also come to the notice of the RP that just before the NCLT had admitted the application of Canara Bank, the company management had concluded the agreement of sale on a number of assets in favour of some lenders. The promoters are already facing charges of allegedly taking the loans by mortgaging the same set of properties to several lenders.

It may be recalled that the NCLT's Hyderabad bench had extended the time to complete the insolvency resolution process till July 10 after excluding 87 days of the time that was consumed by a litigation over the decision to remove the interim resolution professional (IRP). With this, the RP and the committee of creditors (CoC) still have a full 3 months time to wrap up the process.

The company management is facing 8 CBI cases, 6 in Hyderabad, one in Mumbai and one in Chennai, one case from  Enforcement Directorate (Hyderabad), which had made a provisional attachment of assets worth of Rs 2.63 billion, one case from Economic Offenses Wing (EOW), New Delhi, one case by SFIO, Hyderabad, 7 cases by I-T department, four cases filed in the 8th Metropolitan Sessions Court (Nampally) by the Registrar of Companies, 35 cases in various DRTs, 75 cheque bounce cases. 

Also, there are 44 writ petitions pending in Hyderabad High Court, 21 cases in Mumbai High Court and 2 cases in Kolkata High Court involving the company and its promoters.