Wednesday, 13 January 2016

Vote For or Against the Scheme of Repayment Proposed by Helios and Matheson Information Technology Ltd.

As you are aware we are at a crucial stage in the Winding Up case filed against Helios and Matheson Information Technology Ltd. We are faced with two scenarios:

a) Accept the scheme of repayment proposed by Helios (The same has not been submitted by way of affidavit and has not been seen by the judge to our knowledge. You can view the scheme here on this link)
b) Reject the scheme and await winding up or other orders that the judge may pass.

I am preparing the following write up of advantages and disadvantages of both aspects.

a) Accept the scheme of repayment proposed by Helios

  • 7 crores gets disbursed on an immediate basis to various investors (Mainly the small Fixed Deposit holders)
  • In 3 years, if Helios keeps its promise, most Fixed Deposit holders may get paid only their principal amounts.
  • Many Fixed Deposit holders are not covered in the proposed scheme as it is based on the list of depositors submitted by Helios in court. This includes many Fixed Deposit holders whose Fixed Deposits have already matured.
  • All Bill Discounting and Promissory Note holders are left out from the scheme.
  • Scheme does not cover interest on the principal amounts.
  • Scheme does not cover penal interest for delayed payments.
  • Scheme does not mention any thing with respect to TDS already deducted and not credited and also has no mention of future TDS.
  • Scheme does not mention from which date the 3 years begins.
  • Scheme does not have any commitments with safeguards. There is no mention of what can be done if Helios does not comply with the scheme. For example Helios may default on the 1 year commitment and can state that they will still fulfill the same within 3 years deadline. This can lead to further delay in repayment.
  • Scheme does not mention where the funds will be brought from for repayment.
  • Scheme does not provide for security in case of default.
  • If scheme is accepted, Helios directors will enjoy freedom from arrest till repayment is completed (minimum 3 years).
  • Scheme also does not prohibit directors from withdrawing funds during the 3 year period for their own benefit either by way if dividend or salaries.
  • There is no monitoring authority for this scheme who can verify compliance with this scheme.
  • Scheme considers repayment on priority basis to small Fixed Deposit holders. It does not consider hardship cases and does not mention any committee for determining hardship cases.
  • Scheme goes against the spirit of good faith as money accepted by Helios after 31.03.2014 is supposed to be illegally accepted and should be returned immediately as per law.
  • Scheme is long stretched and can further delay the matter.
  • Banks can interrupt this scheme by filing cases that they need to be paid first. On this basis also the scheme can fail.

b) Reject the scheme and await winding up

  • 7 crores get disbursed on basis of maturity of Fixed Deposits or on whatever basis the court deems equitable/charitable.
  • Helios directors are permitted to be arrested by the EOW under the TNPID Act or for cheating if fraud can be established. This can put pressure on them for faster repayment than the scheme.
  • HMIT gets wound up and Liquidator will be appointed who will take charge of the assets and receivables of HMIT, its subsidiaries in US and further subsidiaries. Together we estimate these companies to have a ready net worth of 70 crores.
  • Every one of us gets covered, including Bill Discounting and Promissory Note holders and those Fixed Deposit holders who are not part of the list submitted by Helios to court.
  • Winding up means preparing a list of creditors and assets. Repayment happens first for the expenses of the Liquidators, then secured creditors, then trade creditors, then unsecured creditors. However we have been informed that most banks are unsecured creditors and will rank along side us. So many hands will be there to share the proceeds.
  • If the directors do not mind getting jailed, then we cannot pressurize them to repay faster as anticipated.
  • The procedure for identification and disbursement of assets can take up to a year.

What I request each one of you is to make up your mind and decide on whether you would like to accept the scheme or reject it and cast your vote by clicking on this form below. I will not influence your vote as you must decide for yourself.

Please note that you can vote only once and repeat votes will be disregarded. Your vote will be equal to your investment amount and proportionately we shall calculate against the total data received by us so far. For eg: Total data is of 50 crores. If you have invested 1 lakh your vote will be 0.05%. If you have invested 50 lakhs, your vote will be 1%. If you have invested 1 crore, your vote will be 2%.

Voting will remain open only till Sunday, i.e. 17.01.2016.