Alok Industries stares at insolvency as lenders reject resolution plan
By Express News Service | Published: 17th April 2018 01:06 AM |
MUMBAI: The resolution plan of Alok Industries — one of the 12 large non-performing asset (NPA) accounts identified by the Reserve Bank of India — seems to have reached a dead end. With the 270-day timeframe for resolution ending on April 14, the Committee of Creditors (CoC) will now have to initiate insolvency proceedings as per the Insolvency and Bankruptcy Code (IBC) framework.
According to Reliance Industries Ltd, a joint resolution plan it submitted along with JM Financial Asset Reconstruction Company Ltd failed to secure the approval of lenders. The JM-RIL combine was the only bidder for the assets of Alok Industries.
As per the IBC framework, lenders have to initiate the liquidation process of the company’s assets if the CoC fails to find a resolution plan within the 180-day deadline, which can be further extended by another 90 days. Lenders had met last Friday to discuss the resolution plan, but they didn’t approve the `5,000-crore offer by the bidder as against an outstanding debt of `29,000 crore, as certain conditions weren’t met. Some of the conditions include lenders gaining first charge on `9,000 crore worth receivables, besides having the right to invoke corporate guarantees issued by the current promoters. They also sought to get the remaining 9.5 per cent promoter stake in the company.
Besides, Alok Industries,
the 270-day deadline lapsed for two other firms — Monnet Ispat & Energy Ltd and Jyoti Structures Ltd.
The 12 large accounts were referred to the National Company Law Tribunal (NCLT) and accounted for `2.77 lakh crore worth of bad loans, or about a quarter of the total bad loans in the system.