Punjab National Bank (PNB) has filed an insolvency petition in the National Company Law Tribunal (NCLT) against Jagdish Khattar-promoted Carnation Auto India, a stand-alone automobile service provider, under Section 7 of the Insolvency and Bankruptcy Code (IBC). The matter will come up for hearing on Thursday. Formed in 2009, Carnation had envisioned developing the country’s largest independent multi-brand automobile sales and service network. Prior to starting Carnation, Khattar was managing director of Maruti Suzuki India.
According to Carnation’s website, the company got its first round of funding of `108 crore from PremjiInvest and IFCI Ventures. It also raised Rs 170 crore debt from PNB in 2009 for executing the nationwide rollout of its multi-brand auto solution hubs.
Once the petition is admitted, NCLT will appoint an Insolvency Resolution Professional (IRP), who will come up with a plan on how the assets of the company will be tackled along with a committee of creditors.
If the committee is unable to find a solution within 180 days — this can be extended to 270 days — the borrowing entity will go into liquidation. The powers of the company’s board of directors stands suspended and the management of affairs shall vest with the IRP.