Pooja Film Company, through its proprietor, Vashu Bhagnani has instituted insolvency proceedings at the Delhi bench of the National Company Law Tribunal (“NCLT”) against Sony Pictures Entertainment Films India Private Limited (“Sony Pictures”), for an unpaid debt concerning the Akshay Kumar-starrer ‘Padman’ (the “Film”).
The aforesaid proceedings have been instituted under Section 7 of the Insolvency and Bankruptcy Code, 2016 and Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
The dispute leading to these proceedings involves three parties: (1) Kriarj Entertainment Private Limited (“Kriarj Entertainment”) who is the producer of the said Film, (2) Sony Pictures, who owns the theatrical, music and other rights of the said Film and the corporate debtor in the present proceedings and (3) Pooja Film Company, who allegedly provided financial assistance in relation to the production of the said Film and the financial creditor in the present proceedings.
In its application to the NCLT, Pooja Film Company has alleged as follows:
Kriarj Entertainment entered into a distribution agreement dated 25th May, 2017 with Sony Pictures for the Film wherein Kriarj Entertainment assigned the theatrical, music and other rights of the Film to Sony Pictures. However, after assigning the rights as mentioned hereinabove in favor of Sony Pictures, Kriarj Entertainment approached Pooja Film Company for further financial assistance in relation to the production of the Film.
Accordingly, a Pooja Film Company entered into a ‘Film Financing Agreement’ dated 17th January, 2018 wherein Pooja Film Company agreed to grant a loan of INR 19 crores to Kriarj Entertainment (“Agreement”). INR10 crores were transferred through RTGS to Kriarj Entertainment, whereas the remaining amount of INR 9 crores was transferred as part payment in lieu of booking an apartment. Kriarj Entertainment arranged for a declaration/confirmation from Sony Pictures in relation to repayment of INR 20 crores to Pooja Film Company, being the loan amount of INR 19 crores plus interest of INR 1 crore, from the revenues generated from the distribution of the Film latest by 15th April, 2018.
The Film released worldwide on 9th February, 2018 generating approximate revenue of INR 80 crores in India and INR 35 crores overseas. However, upon failure to make the repayment of the loan plus the interest amount on/before the due date, Pooja Film Company issued a demand letter to Sony Pictures. Thereafter, Sony Pictures made a partial payment of INR 9.52 crores via RTGS to Pooja Film Company. For the balance amount, multiple requests were made by Pooja Film Company, but in vain.
Consequently, on 30th August, 2018, Pooja Film Company filed an application with the NCLT and prayed for Corporate Resolution Process against Sony Pictures for the non-payment of the remaining debt and for appointment of Resolution Professional in relation to the same. The application can be viewed here.
Image Source: Here