NCLAT upholds resolution plan for Big FM owner Reliance Broadcast Network

The National Company Law Appellate Tribunal (NCLAT) on Monday upheld the resolution plan submitted by Sapphire Media Limited for the Reliance Broadcast Network Limited, which owns and operates popular radio channel Big FM. Reliance Broadcast was a part of the Anil Ambani arm of the Reliance group. .A coram of NCLAT’s Chairperson Justice (retd) Ashok Bhushan and Technical Member Barun Mitra on Monday dismissed appeals filed by two unsuccessful resolution applicants who had challenged the NCLT Mumbai's decision to approve the resolution plan submitted by Sapphire Media. “We have considered the submissions of the Appellant alleging material irregularity in the process adopted by the Resolution Professional. We have already found that the challenge mechanism as well as negotiation conducted by the Resolution Professional is in accordance with the CIRP Regulations and Process Note. In evaluation of eligibility of the SRA also there is no irregularity committed by the Resolution Professional. We, thus, do not find any tenable ground raised within the meaning of Section 61(3)(ii) of the IBC, to interfere with the order approving the Resolution Plan," the December 23 NCLAT order said. .Reliance Broadcast Network Limited was admitted to the Corporate Insolvency Resolution Process (CIRP) in February 2024 following an application by IDBI Trusteeship Services Ltd. The resolution process saw several interested parties submit bids, including Abhijit Realtors & Infraventures Pvt. Ltd., Creative Channel Advertising & Marketing Pvt. Ltd and Entertainment Network India Limited (Radio Mirchi).The Committee of Creditors (CoC) approved the bid of Sapphire Media Ltd., which offered ₹261 crores, surpassing other proposals including ₹240 crores from Creative Channel and ₹248 crores from a consortium led by Abhijit Realtors. The CoC approved Sapphire's plan with an overwhelming majority of 88.97% during a vote held on November 16, 2023. In May 2024, the National Company Law Tribunal (NCLT) approved the resolution plan submitted by the company. Abhijit Realtors and Creative Channel had initially filed an application challenging the selection of Sapphire as the Successful Resolution Applicant (SRA), and the approval resolution plan. The NCLT dismissed this application prompting them to file an appeal before the NCLAT. These companies challenged various aspects of the bidding process, alleging irregularities and questioning the eligibility of Sapphire Media as a resolution applicant. Abhijit Realtors argued that the entire challenge process conducted by the Resolution Professional was in violation of the CIRP Regulations of 2016, emphasizing that their consortium had been unfairly excluded despite submitting a higher bid than the initial highest bid.Creative Channel’s counsel echoed these sentiments, asserting that Sapphire Media was ineligible to submit its Resolution Plan, and called for a fresh examination of all existing qualified proposals..Having found no infirmity or infraction of law in the challenge process (bidding process), the NCLAT dismissed allegations that it was not conducted as per the CIRP regulations. “The CoC was fully competent to conduct Negotiation Process for value maximisation after completing the Challenge Process which Negotiation Process was conducted in accordance with RFRP and Process Note," the NCLAT added. The NCLAT also dismissed the contention that Sapphire was not eligible to partake in the bidding as it did not have the requisite turnover. “The SRA was eligible to submit a Resolution Plan … the net worth and turnover of the promoter Mr. Sahil Mangla could be included for purposes of net worth of a group it being entity within the meaning of Clause 3 of Invitation for Expression of Interest," it observed. Thus, the NCLAT upheld the resolution plan submitted by Sapphire Media. .Abhijit Realtors was represented by Senior Advocates Krishnendu Dutta and Abhijeet Sinha, with Advocates Kunal Kanungo, Anuj Tiwari, Pulkit Sharma, Tanushree Sogani, Niharika Sharma, Atishay Jain, Henna Kochhar, Aroshi Pal, Nishant Chotani and Bandita.Creative Channel Advertising & Marketing Pvt. Ltd was represented by Senior Advocate Gaurav Mitra, with Advocates Rakesh Kumar, Ankit Sharma, Mansi Sharma, Shreya Arneja, and Prabhat Kumar.The Resolution Professional was represented by Senior Advocates Neeraj Kishan Kaul and Ramji Srinivasan with Advocates Pooja Mahajan, Mahima Singh, Shreya Mahalwar, Raghav Agarwal, Saurabh BacchawatThe CoC was represented by Senior Advocate Sudhir Makkar with Advocates Divij Kumar, Varun Tandon and Shivang Mukherji, from IndusLaw.Senior Advocates Ardhendmauli Kumar Prasad, and Anupam Lal Das represented the other Respondents. .[Read Judgment]