Months Prior to Covid Lockdown, Nitin Desai Encountered Financial Struggles
Art director Nitin Desai's company, ND's Art World Pvt Ltd, has been in communication with the Non-Banking Financial Company (NBFC) of Edelweiss Group regarding a potential one-time settlement and restructuring of a loan facility amounting to Rs 252 crores. The discussions come amid efforts to address financial matters and find a feasible resolution for the loan situation.
Art Director Nitin Desai's ND Art World Faces Insolvency Proceedings Amidst Lockdown Fallout
In the aftermath of the nationwide Covid-19 lockdown, the financial struggles of art director Nitin Desai's ND Art World Private Ltd have come to light. The company's loan account was declared a stressed account by ECL Finance Ltd, a non-banking finance company (NBFC) promoted by the Edelweiss Group, just six days after the lockdown was imposed.
According to available information, Desai's company was classified under SMA-2 on March 30, 2020, following the early warning NPA guidelines of the Reserve Bank of India. SMA-2 indicates that the loan had been overdue for 61 to 90 days, revealing a lack of regular payments for both the principal installment and interest. The company defaulted on an interest payment of Rs 4.17 crore on January 31, 2020, and the loan was eventually declared as a Non-Performing Asset (NPA) by March 31, 2021, with a total default amount of Rs 252.48 crore as of June 30, 2022.
ND Art World had sought a loan of Rs 150 crore from ECL Finance in 2016 and approached them again in February 2018 for an additional Rs 35 crore, but only Rs 31 crore was disbursed out of the sanctioned amount.
Subsequently, ECL Finance assigned the loan to CFM Asset Reconstruction Company Ltd, which later filed an insolvency case against ND Art World Private Ltd. Asset Reconstruction Companies (ARCs) are specialized entities that acquire NPAs from banks and NBFCs at discounted rates and then pursue defaulters through various means, including bankruptcy courts or one-time settlements.
The insolvency and bankruptcy code (IBC) proceedings were invoked by CFM ARC in December 2020, making them the new financial creditor for ND Art World. The case against the defaulter was further pursued by Edelweiss Asset Reconstruction Company after it was assigned the debt during the company's IBC application. Recently, in July of this year, the NCLT granted the go-ahead for further proceedings.
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