Debt-laden bulk tea producer McLeod Russel is likely to avoid insolvency proceedings for the second time as the Khaitans, the erstwhile promoters, are planning to go ahead with an out-of-court settlement with financial creditor IL&FS Infrastructure Debt Fund. According to sources, an application has been submitted to the National Company Law Appellate Tribunal (NCLAT) seeking approval for the out-of-court settlement with IL&FS Infrastructure Debt Fund (IIDF). The appellate tribunal is scheduled to hear the case on May 12.
Aditya Khaitan, the erstwhile chairman & managing director of McLeod Russel India, was not available for comment.
Earlier, Khaitan had filed an appeal with the NCLAT against the National Company Law Tribunal’s ruling admitting the Williamson Magor group firm to a corporate insolvency resolution process (CIRP).
On February 10, the Kolkata bench of the NCLT admitted IL&FS Infrastructure Debt Fund’s insolvency petition for initiating CIRP against the country’s largest tea producer. IL&FS Infra Asset Management Limited (IIAML), an asset management company, manages IL&FS Infrastructure Debt Fund (IIDF). IIDF, a financial creditor to McLeod, had filed the petition under Section 7 of the Insolvency and Bankruptcy Code against the company for a default in payment of `347.47 crore as on November 12, 2019.
Providing an interim relief to the Khaitans, the NCLAT, on February 22, had said the interim resolution professional (IRP), Ritesh Prasad Adatiya, appointed for the tea major, should not take any further steps in the CIRP. The appellate panel also ordered that the insolvent corporation be administered by the IRP with the cooperation of the suspended directors, officials and employees.
“Surely, Williamson Magor group will try to take McLeod out of CIRP either judicially or through an out-of-court settlement. The group will do whatever is necessary,” sources with direct knowledge of the matter had told FE. Interestingly, this is the second time the tea producer has been admitted to insolvency proceedings.
In August 2021, NCLT, New Delhi, had admitted an insolvency application filed by Techno Electric & Engineering under IBC for a default on repayments of term loans of around `100 crore. The tribunal later gave its approval to withdrawal of CIRP against McLeod after the promoters reached a settlement with Techno Electric, providing a major relief to the financially-stressed Williamson Magor group.