1. NCLT orders Corporate Insolvency Resolution process for REI Agro

NCLT orders Corporate Insolvency Resolution process for REI Agro

The National Company Law Tribunal (NCLT), Kolkata, has ordered for initiation of the Corporate Insolvency Resolution process in respect of Basmati rice exporter REI Agro

By: | Kolkata | Published: March 8, 2017 5:18 AM
The city-based company has allegedly defrauded a 20-lender consortium, led by public sector Uco Bank, through conspiracy, cheating and forgery.

The National Company Law Tribunal (NCLT), Kolkata, has ordered for initiation of the Corporate Insolvency Resolution process in respect of Basmati rice exporter REI Agro, which has allegedly been involved in a massive bank loan fraud, under the provisions of Insolvency and Bankruptcy Code.

The city-based company has allegedly defrauded a 20-lender consortium, led by public sector Uco Bank, through conspiracy, cheating and forgery. The consortium of bankers had extended a staggering R5,262 crore loan to the Basmati rice processing and marketing company.

In a stock exchange filing on Tuesday, REI Agro Limited said pursuant to filing of an application by Surendra Kumar Joshi, an operational creditor of the company, the NCLT, Kolkata, has ordered for initiation of the Corporate Insolvency Resolution process vide its order dated February 27.

By the order of the Tribunal, the powers of the board of directors of the company stand suspended and such powers will be vested with Anil Agarwal, who has been appointed as an Interim Resolution Professional to carry out all compliances as per the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) in respect of the company.

After passing of the order, the NCLT has granted a moratorium to the company. It prohibits any action to foreclose, recover or enforce any security interest created by the lenders in respect of its property, including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It also prohibits recovery of any property by an owner or lessor where such property is occupied by or in the possession of the lenders.

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Significantly, Uco Bank had filed a recovery suit in the debt-recovery tribunal (DRT) nearly two years ago on behalf of the group of banks over a whopping unpaid debt.

After instruction from the Reserve Bank of India (RBI), the lenders had declared the company’s account a fraud and sent the report to the Central Bureau of Investigation (CBI). On the basis of the complaint, the central investigating agency registered a case against REI Agro and conducted searches at four premises of the company and its directors in October, 2015, for allegedly causing a loss of around R3,815 crore to the consortium of banks.

United Bank of India (UBI) had filed a winding up petition against REI Agro in the Kolkata High Court in 2014 for failing to repay R224 crore loans it had borrowed from the bank.

The company has been under financial stress for some time now, posting a R466.57 crore loss during the nine months ended December, 2016. The company has made a net loss of R111.73 crore in the third quarter of this fiscal, it said in a recent BSE filing. Net worth of the company has fully eroded due to the losses suffered by it from time to time, REI Agro said, adding it had applied to BIFR for adopting measures for revival and rehabilitation.

Due to liquidity crunch faced by the company it was not able to procure adequate quantity of raw materials from time to time, resulting in shutdown of all its manufacturing units, the company has said in that stock exchange filing.

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