The sole resolution plan for the debt-ridden Alok Industries by the Reliance Industries-JM Financial Asset Reconstruction Company combine was rejected by the company’s committee of creditors (CoC), paving the way for liquidation. This is the first among 12 companies mentioned in the Reserve Bank of India’s first list of corporate defaulters that will go in for liquidation. In a stock exchange notification on Monday, Alok Industries said, “We now wish to inform you that an application has been preferred by the resolution professional for liquidation of the company with the National Company Law Tribunal (NCLT) at Ahmedabad on April 16, 2018.”
The loss-making textile company was referred to the Ahmedabad bench of the NCLT on July 18, 2017. As per the Insolvency and Bankruptcy Code (IBC), 2016 norms, the 270-day resolution period for Alok Industries ended on April 14. “We have been informed that our plan did not meet with the approval of the Committee of Creditors of Alok Industries as required under the IBC,” Reliance Industries said in a release issued on Sunday evening after its joint bid with JM Financial ARC was rejected.
The NCLT has admitted claims worth Rs 29,615 crore from Alok Industries’ financial creditors, against their claims worth Rs 29,739 crore.
While SBI is the lead bank in the consortium of lenders to Alok Industries, the other banks include Bank of Baroda, Bank of India, Axis Bank, Canara Bank and IDBI Bank. Sources familiar with the transaction had indicated that the resolution plan submitted by the team would require lenders to take a fairly big haircut of 80-85%. Against the outstandings close to Rs 30,000 crore, the RIL-JM Financial combine is reported to have agreed to put in a revised bid of a little over Rs 5,000 crore. In January, the Ahmedabad bench of the NCLT had granted an extension of 90 days, beyond the initial 180 days, for the resolution process on the back of an application made by the resolution professional, Ajay Joshi.