NCLAT dismisses IDBI plea for insolvency against Cyquator Media Services

The National Company Law Appellate Tribunal (NCLAT) on Thursday dismissed the petition of IDBI Trusteeship Services challenging the order of NCLT which had denied starting insolvency proceedings against Essel group firm Cyquator Media Services.

A two-member bench of the appellate tribunal observed that the default, claimed by IDBI Trusteeship, had happened during June 2020, which is covered under the period excluded under Section 10A of the Insolvency and Bankruptcy Code, 2016.

Section 10A bars absolutely and forever, the filing of any application under Sections 7, 9 and 10 of the Code, for defaults committed on or after March 25, 2020 up to March 25, 2021.

No application for initiation of the corporate insolvency resolution process can be filed in respect of any default that has occurred on or after March 25, 2020 till September 24, 2020, which was subsequently extended till March 25, 2021 by the government through a notification dated December 22, 2022.

In June this year, the Mumbai bench of the National Company Law Tribunal (NCLT) dismissed the petition filed by IDBI Trusteeship Services under section 7 of the IBC as a financial creditor.

This was subsequently challenged by IDBI Trusteeship Services before the appellate tribunal NCLAT.

According to reports, IDBI Trusteeship Services has claimed a financial debt of Rs 599 crore. It had taken non-convertible debentures issued by Essel Infraprojects and other group firms as a corporate guarantor.

However, after Essel Infraprojects failed to pay after NCDs became due, IDBI Trusteeship Services invoked the corporate guarantee by Cyquator Media Services and claimed Rs 591 crore along with interest.