The Ahmedabad bench of the National Company Law Tribunal (NCLT) on Tuesday admitted State Bank of India’s (SBI) insolvency petition against Alok Industries. The court appointed Ajay Joshi as the interim resolution professional (IRP) for insolvency proceedings aimed at recovering close to Rs 4,000 crore that Alok owes SBI.
According to data from Bloomberg, at the end of March 2017, Alok Industries owed bankers a total of Rs 23,443 crore.
The NCLT bench disallowed a petition filed by Industrial and Commerce Bank of China (ICBC) seeking the dismissal or deferment of the insolvency proceedings against Alok Industries citing ongoing litigation in the Bombay High Court.
The counsel for ICBC argued the NCLT should respect the ongoing liquidation proceedings filed by ICBC in the Bombay HC which would otherwise end up being infructuous. “If the tribunal admits the application today, the Bombay High Court’s powers to pass orders may come under A cloud,” lawyers for ICBC argued.
The counsel for SBI pointed out that the winding up proceedings of a debtor could not be stayed under Section 446 of the Companies Act when similar litigation was on in other courts by other creditors. This is because Section 238 of the Insolvency and Bankruptcy Code (IBC), 2016, prevailed over the former as a subsequent Act, thereby according NCLT powers to undertake insolvency proceedings.
The textile company reported a consolidated loss of Rs 3,071 crore on an income of Rs 8,919 crore in 2016-17. It had booked a loss of Rs 4,367 crore on revenue of Rs 12,929 crore in 2015-16.
Lenders to Alok Industries had begun insolvency proceedings against the textile firm in June by moving an application before the NCLT.
According to the IBC, once the application filed by a financial creditor under Section 7 is admitted by the NCLT, a moratorium period of 180 days commences, which can be extended up to 270 days. During the moratorium period, the IRP takes operating and financial control of the defaulting entity’s board till the resolution process is completed.
-By Vimukt Dave