DQ Entertainment fine highlights importance of governance breaches
December 21st, 2023
Three directors of DQ Entertainment have been fined $30.8 million in a landmark ruling for fraudulent and reckless trading and other breaches of company law.
Directors Rashida Adenwala, Tapaas Chakravarti and Sanjay Choudhary were made personally liable for the fine in a ruling by the Irish High Court.
The three directors were all based in India and the two Irish-based directors of the company had no order made against them, as the application against them was struck out.
The application was the first of its kind as it was brought by Patrick Bance, the receiver and manager appointed to DQ Entertainment, alongside the secured creditor and not a liquidator.
As a result, it was necessary for the applicants to first prove that the company was unable to pay its debts and that the reason for it being wound up was the insufficiency of its assets.
The Irish court found the company consistently overstated its intangible assets and had been insolvent since at least March 2017.
In 2016, the company’s shares were cancelled from trading on AIM after it failed to find a replacement nominated adviser.
The company has struggled to replace its adviser due to the alleged change of control and possible event of default under the terms of the bonds issued by certain DQ’s subsidiaries, the company said at the time.
DQ Entertainment is a global entertainment group and is listed on the AIM market of LSE in London and BSE in India. The company is in the business of animation, gaming and live action content production as well as licensing and distribution.
The ruling sets a precedent that Irish Courts are willing, in some circumstances, to impose personal liability on directors for corporate infringements and governance breaches.
Last Updated: 21 December 2023