NCLT approves JC Flowers bankruptcy proceedings against e-commerce spin-off Magnum

Bombay: The National Company Law Tribunal (NCLT), Mumbai, has allowed JC Flowers (JCF) Asset Reconstruction Private Limited, acting as trustee of JCF YES Trust, to initiate insolvency proceedings against E-Commerce Magnum Solution.

About the Order

The order came after the tribunal found that E-Commerce Magnum Solution had failed to repay a financial debt of Rs 340.68 crore to the erstwhile company. According to the complainant, the loan was taken out between Yes Bank and E-Commerce Magnum Solution to avail a credit line of Rs 500 crore. However, out of the approved limit of Rs 500 crore, Yes Bank had disbursed a loan of Rs 283 crore. As per the account statement, the loan amount was Rs 340 crore.

Term Loan was approved for the construction and development of a project, namely “One Hughes”. After the company failed to repay the loan amount on time, Yes Bank filed a case against it.

Debt Company Opposes Petition

The petition was opposed by the debtor company. It was stated that there was no amount on which the creditor could charge interest.

The Tribunal after hearing both the parties held, “E-Commerce Magnum Solution was making interest payments on the term loans up to August 2019, but no interest payment was made after that date. Therefore, as per Yes Bank, the date of default is September 1, 2019. In view of the continuous default by the defaulting company, the entire credit facility of Rs 297,80,94,329 crore was cancelled vide notification dated January 15, 2020. This continuous default of financial debt to Yes Bank of over Rs 1 crore has been satisfactorily established from the records.”The Tribunal while passing the orders said, “We have no option but to admit E-Commerce Magnum Solution into the corporate resolution process and the Interim Insolvency Practitioner is hereby appointed to discharge the relevant functions.”