Thursday, June 20, 2024

Smaaash founder questions RP’s actions

MUMBAI : Shripal Morakhia, the founder and former promoter of Smaaash Entertainment Pvt. Ltd, which was admitted for insolvency by the National Company Law Tribunal (NCLT) in May 2022, has raised allegations of professional misconduct and harassment of employees against the resolution professional (RP).

In early March, 82 employees tendered their resignations due to the alleged harassment by he RP, including the filing of multiple legal cases against the employees, Morakhia alleged in the emails, accessed by Mint.

Morakhia also alleged that the chief executive of the company colluded with the tribunal-appointed RP Bhrugesh Amin and received significant pay hikes. Moreover, he said the RP has been misusing the cash flows of the firm and harassing the employees, leading to mass resignations.

Amin declined to comment, on the allegations, and said that in his capacity as the RP, he is “obligated” to respect the “confidential nature” of the process and uphold it.

In his emails, Morakhia said the CEO’s salary has more than doubled within three months.

“Firstly, your CEO (Shirish Kotmire) has ditched his own organization that seconded him to Smaaash. He surreptitiously and in connivance with the resolution professional last year increased his salary from 8 lakh in May to 14 lakh in June to a further 20 lakh in July,” Morakhia alleged.

An email query sent to the 64-year-old founder of the sports entertainment platform did not elicit any response till press time.

Smaaash is also backed by former cricketer Sachin Tendulkar, who owns a 4% stake.

In May 2022, Smaaash was admitted for insolvency after a default of 292 crore to Edelweiss Asset Reconstruction Co. The NCLT had appointed Amin as the RP for taking over the day-to-day operations of the company. Morakhia and Edelweiss are also at loggerheads over a settlement proposed by Morakhia to get the firm out of the insolvency process.

Smaash suffered a loss since it was shut for 18 months during the pandemic, but revenues improved after covid-led restrictions were lifted.

According to insiders, the company is expected to report earnings before interest, taxes, depreciation and amortization of 60 crore in FY23.

Morakhia also alleged in his emails that despite repeated requests for seeking a meeting with the lenders and the RP, he has not received any response. In one of the communications, he claimed to submit as many as 17 proposals to Edelweiss for a resolution, all of which have been rejected without assigning any reason. “The RP has been taking undue advantage of cash flows in the company and using it to create a plethora of consultants on whom the company’s money is being wasted,” said a former employees who quit the firm, seeking anonymity. “Tell us whether the money of the company has to be used for the development of its people and the company, or it has to be used for hiring consultants who are not required?” he added

Morakhia also alleged that the firm’s hard-earned money is being wasted on paying the RP and for legal fees but not on productive growth. “The reason Smaaash had been taken to NCLT is that Edelweiss and AHA (a Morakhia-owned holding firm) has not been able to settle (the issue) amicably, for which I offered a number of solutions,” he added.

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