NCLAT Permits Withdrawal of Insolvency Appeal Against Digital Venture Private Limited

In a significant development for the education sector, the National Company Law Appellate Tribunal (NCLAT) has allowed the withdrawal of an appeal related to the Corporate Insolvency Resolution Process (CIRP) against Digital Venture Private Limited (DVPL). This decision comes as a result of a settlement reached between DVPL and its financial creditor, Assets Care and Reconstruction Enterprise Limited (ACRE).

Key Points of the NCLAT Order

• The NCLAT has granted liberty to file an application for CIRP withdrawal at the National Company Law Tribunal (NCLT) Mumbai within two weeks.
• The tribunal has requested NCLT Mumbai to decide on the withdrawal application within one month from its listing date.
• The stay order on the CIRP will remain in effect until NCLT Mumbai reaches a decision on the application.

Background of the Case

The original insolvency proceedings involved a substantial debt amount of Rs. 10,63,54,26,47.20. DVPL, which operates schools with six units across various locations serving over 5,000 students, found itself in financial distress leading to the initiation of the CIRP.

Implications for the Education Sector

This development is particularly significant for the education sector, as it potentially ensures the continuity of educational services provided by DVPL to thousands of students. The resolution of this case through settlement demonstrates the importance of finding amicable solutions in insolvency cases, especially when they involve essential services like education.

Next Steps

According to the LODR (Listing Obligations and Disclosure Requirements) data filed by Zee Learn Limited , the parent company of DVPL:

1. The suspended Director of DVPL, Shri Amit Kumar Bansal, will file an appropriate application for withdrawal of CIRP at NCLT Mumbai.
2. This application will be based on the settlement reached with ACRE and in accordance with Section 12A of the Insolvency and Bankruptcy Code, 2016.
3. The application must be filed within two weeks of the NCLAT order.
4. NCLT Mumbai is expected to decide on this application within one month from its listing date.

Market Impact

While the specific impact on Zee Learn Limited's stock price is not provided in the available data, this resolution is likely to be viewed positively by investors and stakeholders. The settlement and potential withdrawal of CIRP proceedings could lead to improved financial stability for DVPL and, by extension, its parent company Zee Learn Limited.

This case underscores the complexities involved in insolvency proceedings, particularly when they involve educational institutions. It also highlights the importance of regulatory bodies like NCLAT and NCLT in facilitating resolutions that balance the interests of creditors with those of other stakeholders, including students and employees in the education sector.