The National Company Law Tribunal (NCLT) has appointed an insolvency resolution professional.

Deccan Chronicle loan fraud case Insolvency process begins after Canara Bank petition
news News Thursday, July 20, 2017 - 09:52

The National Company Law Tribunal (NCLT)'s Hyderabad bench appointed an insolvency resolution professional (IRP) on Wednesday, to resolve the crisis faced by the Deccan Chronicle Holdings Limited (DCHL). 

The Times of India reported that the NCLT invoked Section 7 of the Insolvency and Bankruptcy Code (IBC), and declared a moratorium of 180 days, after hearing a petition filed by Canara Bank. 

Speaking to TOI Canara Bank's standing counsel Dishit Bhattacharjee said that the IRP would now make a public announcement of the corporate insolvency resolution process and invite lenders to submit their claims, following which a committee of creditors will be formed.

The IRP will run the show at DCHL, particularly its finances, the TOI report adds.

DCHL's lawyer refused to make any comments, telling Business Standard, "We will be able to take a view only after going through the order copy, which is expected to be given tomorrow," he said.

The NCLT had admitted the petition by Canara Bank in the first week of July.

Background

In March this year, the Enforcement Directorate attached assets worth Rs 263.10 crore of Hyderabad-based DCHL in a bank loan fraud case, under the provisions of the Prevention of Money Laundering Act (PMLA).

These assets were other than the properties pledged to banks by DCHL, the ED said.

The bank loan fraud caused a loss of Rs 1,161.93 crore to six public sector banks -- Canara Bank, Andhra Bank, Indian Overseas Bank, Central Bank of India, Corporation Bank and IDBI Bank.

The ED had booked a case under the PMLA against the company and others based on a FIR and charge sheet by the Central Bureau of Investigation (CBI).

The CBI registered the FIR for criminal conspiracy and other provisions for causing wrongful loss of Rs 357.77 crore to Canara Bank.

The DCHL had allegedly availed loans by overstating the receivables, under-stating huge loan liabilities by furnishing fabricated financial statements and not disclosing the loans.

In all, it availed 111 loans amounting to Rs 10,000 crore from 16 different banks during 2004 to 2012.

These loans were used for other than the specified purposes, investing in 20 group companies and firms, acquiring companies with huge premiums, payments to Airbus towards purchase of cargo aircraft and payments to BCCI for Indian Premier League franchisee of Deccan Chargers.

In February 2015, Deccan Chronicle owner T Venkattram Reddy and managing editor T Ravi Vinayak Reddy were arrested.

The group’s vice chairman PK Iyer, as well as the company's auditors CB Mouli & Associates, are the other accused in the case.

 

 

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