Nearly eleven years after default on payments on the National Spot Exchange Ltd (NSEL), 63 moons technologies (formerly Financial Technologies) promoted NSEL and the brokers involved have proposed to settle the case by paying ₹1,950 crore to investors.
This one-time settlement is equivalent to approximately 42 percent of the principal amount (₹4,650 crore) owed to unpaid investors.
63 moons, NSEL and brokers will pay the settlement amount (₹1,950 crore) and will be entitled to the amount before any court, authority or other forum.
The NSEL Investors Forum (NIF) – which was tasked to find an amicable solution – has made a proposal and put it to a vote among investors. The online module for one-time settlement will go live on November 11 at 11 a.m. and will be available for approval/deviation until December 9.
Reaching a settlement would require the consent of a majority of investors owning more than 75 percent of the outstanding dues.
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According to the proposal, prepared for the consent of investors, the settlement amount will be paid by 63 moons and NSEL to all remaining unpaid investors in proportion to their outstanding claims as on July 31, 2024. All investors will receive their outstanding dues on a commission basis. -rata basis in proportion to their outstanding amounts at the end of July 2024.
Any amounts lying with any court, authority or other forum in respect of the payment default will only be available to 63 moons and NSEL for payment of the settlement amount. However, 63 moons and NSEL will be fully entitled to such amounts after the full settlement amount has been transferred.
Certain brokers through whom investors had invested in NSEL have informed the NIF that they are also interested in a one-time comprehensive settlement. The brokers have indicated that they are likely to participate in the proposed settlement by contributing the amount earned by them towards brokerage and the same can be used by 63 moons and NSEL as part of the settlement amount, according to NIF’s communication to investors.
In such a case and subject to payment of the settlement amount, proceedings against brokers who contributed in the above manner shall be withdrawn. After payment of the settlement amount, 63 moons and NSEL would be entitled to contribution from brokers.
The payment of the settlement amount or part thereof will be subject to certain legal proceedings against 63 moons, NSEL and persons identified by 63 moons who will be withdrawn/settled/closed and discharged from their liabilities as provided in the settlement agreement, according to the proposal.
Once the legal proceedings are withdrawn/settled/closed, the settlement amount will be transferred by 63 moons and NSEL
Recovery process
As per the proposal, eligible investors in the ₹10-20 lakh bracket had already received about 37 per cent (6.6 per cent from NSEL and 30.75 per cent from the competent authority). “Now, with this settlement, they will receive approximately 42 percent of the current outstanding amount. This will result in an overall recovery of 79 percent,” the report said.
Further, in case of the rest of the unpaid investors, they have already received about 7 percent (6.6 percent from NSEL and 0.75 percent from the competent authority). Now, with this settlement, they will receive approximately 42 percent of the current outstanding amount. According to the proposal, this will result in a total recovery of 49 percent.
The approval for the proposal, once granted by an investor, will act as a no objection by the investor to NSEL and 63 mane and persons indicated by 63 mane to submit necessary interim requests or initiate other appropriate procedures at the relevant courts for the purposes of the settlement, the Forum said.
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It will also act as a permission to lift attachments on properties and thereafter make the properties available for the purpose of settlement of claims of investors, the proposal said.
The settlement agreement should be submitted by 63 moons and NSEL within 90 days from the date on which NIF communicates the receipt of the consent of the majority and maximum of the investors. The consent given will be valid for 180 days from the date on which the relevant courts/forums approve the settlement and lift the seizure of 63 mane’s properties, NIF said
“Within this period, 63 moons, as approved by the appropriate courts/forums, will pay the settlement amount,” the report said.
In July 2013, NSEL abruptly suspended trading in all its spot contracts, leaving investors and brokers in the lurch. The exchange had approximately 148 members and brokers to facilitate trading on the exchange.
The exchange owed ₹5,500 crore to 13,000 investors and cleared dues from retail investors by paying ₹92 crore in 2013.
