The National Company Law Tribunal (NCLT) has accepted a bid by an unregistered union of the apparel brand Reid & Taylor India to take over the firm thereby stalling the liquidation process. Any further hearing on the matter will be on January 8.
Owned by the Kasliwal family run S Kumar Group, Reid & Taylor is facing bankruptcy proceedings and is struggling to pay of its Rs.4,100 crore debt to banks and other lenders. On December 14, 2018, the committee of creditors had decided to go in for liquidation as no resolution plan was submitted by the company.
Its lenders and financial creditors include Finquest Financial Solution which is the largest with close to Rs.800 crore of claims, Union Bank of India, Punjab National Bank, NSE 4.43 %, IL&FS Financial Services, IDBI BankNSE 0.16 % and L&T Finance, etc.
The NCLT bench consisting of Bhaskara Pantula Mohan and V Nallasenapathy also asked the resolution professionals– Animesh Bisht and Harpreet Singh Gupta of EY–to get the bids from the two foreign investors.
The bids are to be submitted by SP Growth Partners of Hong Kong and an unnamed investor based out of UK on or before January 7, for the representative from FY to present the proposal to the tribunal the next day when they will hear the matter again.
The NCLT also directed the investor to provide the details of its net worth, which the RP has fixed at Rs.50 crore and Rs.250 crore of assets under management to be eligible to bid for the bankrupt firm. The company has around 1,200 employees and has a plant in Mysuru, which is running at under 30 percent of its installed capacity now and thus incurring cash losses.
“Considering the background and the quality of the products produced by the company, which are sold at a very high premium, we are of the view that an opportunity may be given to the union to avoid liquidation. As liquidation will get only a meagre value, the creditors will be most affected and the workmen will be losing their livelihood,” the tribunal said in an order passed on January 1 on an RP proposal from the union submitted on December 19, 2018.
Accordingly, the IBC is looking for a resolution rather than liquidation. The tribunal also directed the RP to keep both the interested investors from Hong Kong and Britain in loop and check their eligibility.
