Tikona Infinet Settles Rs 116 Crore Dispute With L&T Finance, to Exit Insolvency

Noida based broadband services provider Tikona Infinet has settled with L&T Finance to withdraw insolvency proceedings started against the company.

“It was a dispute amongst the shareholders about coupon rights. I am glad to inform that a settlement agreement has been executed already which will settle all disputes amicably between L&T and other majority shareholders. A withdrawal application to NCLT is under process,” Prakash Bajpai, Founder & CEO of Tikona Infinet said in a statement on May 10. as per the Hindu businessline.

Earlier, a Mumbai bench of the National Company Law Tribunal (NCLT) has initiated insolvency proceedings against Tikona Infinet following a plea by L&T Finance, the financial services arm of engineering and construction giant Larsen & Toubro.

L&T Finance claimed that Tikona Infinet had defaulted on coupon payments amounting to Rs 116.01 crore for its Series 'E' Compulsorily Convertible Debentures (CCDs).

The dispute originates from a Share Subscription Agreement (SSA) signed between the parties in August 2017 and later amended in 2018. L&T Finance alleged that Tikona Infinet failed to meet its payment obligations in August 2024.

Along with admitting the petition, the tribunal, in its May 1 order, appointed Dhiren Shantilal Shah as the Interim Resolution Professional (IRP) for the wireless broadband service provider.

A public announcement in this regard was made on May 4, calling on the creditors of Tikona Infinet Private Limited to submit their claims, along with proof, to the interim resolution professional on or before May 15.

According to a report by The Economic Times citing the NCLT order, the tribunal observed that Compulsorily Convertible Debentures (CCDs) can be considered hybrid instruments with debt-like characteristics, depending on the specific context.

"The nature of the instrument depends on the facts and circumstances of each case," noted the bench comprising Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan in their 44-page ruling.

The tribunal further said, "Even if certain CCDs are designed for mandatory conversion into equity shares at a predetermined date or upon specific events, and do not require repayment of the principal, they can still be treated as financial debt—provided the payment of the coupon is an absolute obligation on the corporate debtor (Tikona Infinet)."

The newspaper said that, senior counsel Mustafa Doctor, along with Murtaza Kachwalla of Argus Partners, appeared on behalf of L&T Finance. They argued that Tikona Infinet had defaulted on its coupon payments for the Series 'E' CCDs held by the petitioner.

In response, advocate Shyam Kapadia and Munaf Virjee of law firm AMR Law appeared for Tikona Infinet, contending that the Series 'E' convertibles had been classified as equity instruments in the company’s balance sheet and not as financial liabilities.