Dream11's Insolvency Order Overturned By NCLAT
The company had argued that the NCLT order overlooked the fact that the period from March 27, 2020, to March 26, 2021, was exempted under the Insolvency and Bankruptcy Code, 2016.
The National Company Law Appellate Tribunal on Thursday overturned the insolvency order against Sporta Technologies Pvt., the parent company of the fantasy sports platform Dream11, for a debt exceeding Rs 7 crore.
In February, the appellate tribunal halted the corporate insolvency resolution process against the company and instructed the Interim Resolution Professional to ensure the company continued functioning as a going concern.
The debt stemmed from a lease and licence agreement with Reward Business Solutions Pvt. dating back to 2019, in which Sporta Technologies failed to meet the monthly licence fee obligations.
Although the agreement granted Sporta Technologies a five-year licence with a monthly fee, it has defaulted on payments since March 2020. The petitioner issued a demand notice in 2021, which went unheeded, leading to the petition against the company.
Sporta Technologies countered by citing the adverse impact of the Covid-19 pandemic on its ability to negotiate fees and confusion regarding who was the owner of the said property, Reward Solutions or Mangalam Vanijya Pvt.
The company had also argued that the NCLT's order overlooked the fact that the period from March 27, 2020, to March 26, 2021, was exempted under the Insolvency and Bankruptcy Code, 2016.
This exemption provides immunity from insolvency proceedings for defaults occurring during the specified period, which coincided with the onset and initial impact of the Covid-19 pandemic. Therefore, Sporta Technologies contended that the demand for payment during this period should not have been considered for insolvency proceedings.
The NCLAT determined that the NCLT made a mistake by accepting Reward Solution's request for insolvency since it was restricted due to this exception. Now, the company has been instructed to cover the costs incurred by the Interim Resolution Professional during the period from Feb. 9 till the present time.