NCLT Hyderabad Declares Former Deccan Chronicle Promoter T Venkatram Reddy Bankrupt

The National Company Law Tribunal (NCLT) at Hyderabad has declared Tikkavarapu Venkatram Reddy, former promoter of Deccan Chronicle Holdings Limited, the publisher of the Deccan Chronicle newspaper, bankrupt after he failed to submit a repayment plan as a personal guarantor for the company's borrowings.

A bench of Judicial Member Rajeev Bhardwaj and Technical Member Sanjay Puri, while allowing an application filed by L&T Finance Ltd, observed,

“Considering the above circumstances, and there being no repayment plan submitted by the Personal Guarantor or any material indicating resolution of the insolvency, this Tribunal finds it just and proper to order the commencement of bankruptcy proceedings against the Personal Guarantor in accordance with the provisions of the IBC, 2016.”

Venkatram Reddy had stood as a personal guarantor for Deccan Chronicle, a Hyderabad-based newspaper publisher, which had availed a Rs 25 crore term loan from L&T Finance in May 2011.

After Deccan Chronicle stopped servicing the loan, an arbitral award dated March 15, 2023 asked both the company and its personal guarantor to jointly clear the dues with interest. That award is now lying in execution before the Bombay High Court.

In parallel, insolvency proceedings against Deccan Chronicle were admitted by the tribunal in July 2017, and a resolution plan was approved in June 2019. Insolvency proceedings were then taken up against Reddy in his individual capacity as the personal guarantor. That petition was admitted in June 2022, and an interim moratorium followed.

With no repayment forthcoming, L&T Finance returned to the tribunal seeking initiation of bankruptcy proceedings. It stated that Venkatram Reddy had failed to submit any viable repayment plan despite being given multiple opportunities.

Accepting the plea, the tribunal held that there was no scope to indicate any possibility of resolution and that initiation of bankruptcy was the natural consequence of the guarantor's failure to repay the debt. It noted that mere denial of the creditor's claim without justification was insufficient.

The bench observed, “It is observed that in the absence of a repayment plan filed by the Personal Guarantor, the Resolution Professional could not proceed with preparing or submitting the report as required under Section 105 and 114 of the Code. This failure is treated as equivalent to the rejection of the repayment plan, as contemplated under Section 115(2) of the IBC.”

The tribunal accordingly declared Venkatram Reddy bankrupt and appointed Renuka Devi Rangaswamy as the bankruptcy trustee. She has been directed to safeguard the bankrupt's assets and issue notices to creditors, calling upon them to file their claims within ten days of the order