NCLAT Reserves Judgment In Dream11 Insolvency Challenge
The National Company Law Appellate Tribunal (NCLAT) has reserved its judgment in a plea filed by Bhavit Sheth, cofounder
NCLAT Reserves Judgment In Dream11 Insolvency Challenge
The National Company Law Appellate Tribunal (NCLAT) has reserved its judgment in a plea filed by Bhavit Sheth, cofounder and COO of Dream11. Sheth challenges a bankruptcy court order that initiated insolvency resolution proceedings against its parent company, Sporta Technologies. The NCLAT granted parties three days to submit written submissions.
Bhavit Sheth's legal representative contended that Reward Solutions, an operational creditor, filed a petition with the National Company Law Tribunal (NCLT) to initiate the corporate insolvency resolution process (CIRP) against the fantasy sports company. The argument was based on a default that occurred within the timeline specified under Section 10A of the Insolvency and Bankruptcy Code (IBC), 2016.
The government had introduced Section 10A to the IBC, prohibiting applications for CRIP initiation for defaults arising after March 25, 2020, for a specified period.
However, the counsel representing the NCLT-appointed resolution professional (RP) of Sporta Technologies disputed this claim, arguing that there is a distinction between default and debt. They contended that Section 10A of the Insolvency and Bankruptcy Code (IBC), 2016, applies solely to default and not to the ability to claim a debt that has fallen due. While the debt in question falls within the timeframe covered by Section 10A, the default occurred after this period, as Dream11 received a demand notice on April 20, 2021. According to the IBC, the default for a Section 9 application occurs 10 days after the demand notice is served.