Saturday, 23 January 2016

Winding Up Petition 143/2015 - Hearing Update (21/01/2016)

The matter was heard on Thursday 21/01/2016. The delay in this update was purely on account of the fact that an order had been passed but the same was not available with us and we did not want to speculate on the same.

The Madras High Court has ordered Helios and Matheson Information Technology Ltd. to be wound up. The order can be found by clicking on this link.

Brief synopsis of the order:
- Helios and Matheson Information Technology Ltd. has become commercially insolvent and is unable to clear dues.
- The Company has siphoned off funds and cannot be believed further.
- The Company is ordered to be wound up.
- Official Liquidator will be appointed to take over affairs of the Company so that monies which are realizable are not frittered away.
- The directors of the Company are to submit their statement of affairs to the official Liquidator.
- The Ministry of Corporate Affairs Serious Fraud Investigating Office is directed to investigate the Company. Report to be submitted to the Court before 18.03.2016. 

Observations in the order:
- The Company tried to drag the matter;
- The promises made (by the Company) were not kept up;
- The Company has not disclosed the full details regarding the source of funds. Nor the whereabouts of the deposits received is exposed;
- The Company attempted to deviate and confuse the entire issue by submitting a revised scheme which is clearly unworkable;
- The attitude reveals that the management has acted in a surreptitious manner so as to purchase breathing time to sell properties;
- The Company has no respect for Court orders and it has committed contempt of Court;
- There is no bona fide in the attitude of the Company;
- The management continues to indulge in prevarication;
 However the Court did not pass any observation remarking that the total deposits accepted are actually far greater than reported by Helios and Matheson Information Technology Ltd. Also the Court did not specify whether the interim order protecting the key personnel of the Company from arrest is vacated or not.

Implications of the order:
- The Company will be wound up.
- An independent person called the Official Liquidator is appointed. His duties are to investigate the failure of the Company in fulfilling its dues, obtain information on the statement of affairs of the Company from its management, to draw up a list of assets, surpluses, receivables, payables, creditors, debtors, etc., to take over the management and affairs of the Company and sell the assets and realize the debts for the purpose of distribution amongst the creditors of the Company.
- Any realizable monies will be first paid up to the Government if any dues exist towards revenue/taxes, then to the employees and other higher ranked payees.
- Then all the creditors will be ranked as per Companies Act, 2013 and distribution of proceeds will be made on basis of law.
- This process can take between 6 months to a year.
- If the MCA's SFIO finds a case of serious fraud, the directors could face jail time and penalties.

What we will do:
- Provide a complete list of depositors available with us to the Official Liquidator;
- Give the Official Liquidator information on subsidiaries of the Company and assets held by them;
- Obtain arrest of the directors of the Company for fraud;
- Resist any appeal by the Company which is likely to happen;
- Obtain clarity on the status of the interim order which permitted freedom from arrest for the key personnel of Helios and Matheson Information Technology Ltd.