Dream11 Insolvency: NCLAT Orders IRP Standstill

NCLT admits insolvency plea against Dream11’s parent company

Dream11, India’s largest sports fantasy platform, is in trouble after the National Company Law Tribunal (NCLT) admitted an insolvency plea against its parent company, Sporta Technologies Private Limited, over a rent default of Rs 7.6 crore. The NCLT has appointed Madan Bajrang Lal Vaishnawa as the Interim Resolution Professional (IRP) responsible for handling the affairs of the company.

NCLAT stays further steps by IRP till February 23

However, the National Company Law Appellate Tribunal (NCLAT), on Thursday, noted that the order passed by the NCLT shall remain for now and the IRP may continue to keep the company as a going concern till then, but take no further steps. The appellate tribunal has listed the matter for February 23.

Dream11 co-founder requests no further action by IRP

The counsel appearing for the co-founder and COO of Dream11, Bhavit Seth, had requested that no further steps be taken by the IRP, as any action will adversely affect the company which is preparing for the upcoming IPL season. He also said that they were willing to deposit the money with the tribunal, but there was a lack of clarity on who the payment was to be made.

Background of the insolvency case

The insolvency proceedings were initiated by Reward Solutions Private Limited, which itself is under an insolvency resolution process. In 2019, Dream11 entered into a lease agreement with Reward Solutions for its office space for five years for a monthly payment of Rs 49.8 lakh for the initial three years and Rs 57.3 lakh for two years, with a three-year lock-in. Sporta had argued that Reward could not be treated as an operational creditor to initiate proceedings.

Dream11 growth and valuation

Dream11 is one of the most popular and successful online gaming platforms in India, with over 100 million users. It is also the title sponsor of the Indian Premier League (IPL), the world’s richest cricket league. The company was valued at over $2 billion in 2020 after raising funds from investors like Tencent, Steadview Capital and Kalaari Capital. In November 2021, it raised another $840 million from investors like Falcon Edge, DST Global, D1 Capital, Redbird Capital and Tiger Global at a valuation of $8 billion .

Impact and response of Dream11

The insolvency case against Dream11 has raised concerns among its users, investors and partners, who are hoping for a quick resolution of the matter. The company has not issued any official statement on the issue so far. However, it has assured its users that their deposits and winnings are safe and secure. It has also said that it will continue to operate normally and offer its services to its users.

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