New Delhi: In a significant development in the insolvency proceedings of Siti Networks, the National Company Law Tribunal (NCLT) has ordered financial creditors to reverse transactions worth Rs 143 crores. The directive came in response to an application filed by Asset Reconstruction Company (India), a financial creditor of Siti, alleging that certain creditors had withdrawn funds during the company’s moratorium period and while insolvency proceedings were stayed.
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The NCLT’s Mumbai bench ruled that all transactions and appropriations made between March 7, 2023, and August 10, 2023, must be reversed, and the funds must be returned to Siti Networks’ account within four weeks. The tribunal also reaffirmed the Insolvency Commencement Date (ICD) for Siti as February 22, 2023, ensuring that all insolvency-related activities are aligned with this timeline.
The order comes after a series of legal battles involving Siti Networks and its creditors. The company was admitted to the Corporate Insolvency Resolution Process (CIRP) in February 2023, but the proceedings were temporarily halted due to a challenge by a suspended director. While the director’s appeal was eventually dismissed by the NCLAT and the Supreme Court, the stay on insolvency proceedings allowed certain creditors to withdraw funds.
The NCLT’s decision to reverse these transactions is a significant step towards resolving the financial issues faced by Siti Networks and ensuring a fair distribution of assets among its creditors. The outcome of this case will have implications for other insolvency proceedings in India and could set a precedent for how creditors should conduct themselves during moratorium periods.
