The National Company Law Tribunal (NCLT) has ordered liquidation of the bankrupt Reid & Taylor after the employees association and other bidders failed to come up with a viable revival plan.
The Nitin Kasliwal-run company owes over Rs 4,100 crore to the lenders led by Finquest Financial Solutions. The Mumbai bench of the NCLT had admitted the company for insolvency resolution in April 2018 after Edelweiss Asset Reconstruction Company (ARC) filed a case over default of Rs 66 crore dues. Finquest also approached the tribunal against Reid & Taylor for defaulting on around Rs 775 crore dues.
The lenders had on December 14, 2018, decided to go in for liquidation as no resolution plan was submitted even though it got eight expressions of interest. On January 7, 2019, the Resolution Professional Venkatesan Sankaranarayan of EY had filed an application with NCLT after a special audit by KPMG had detected fraudulent transactions worth Rs 1810.11 crore by undervaluing many inter- and intra-company purchases and an additional write-off of Rs 1,713.88 crore without any evidence, under Section 66 (1) of the bankruptcy law.
The total fraudulent transaction is pegged at Rs 3,523.99 crore, the RP had said.
The NCLT Bench comprising of Bhaskar Pantulu Mohan and V Nallasenapathy, in a speaking order, ruled that investors have failed to satisfy their networth before the NCLT and hence it had no option but to order liquidation of the company preferably as a going concern. “We call upon the registrar and the Resolution Professional to put in their best efforts to ensure that the company is sold as a going concern,” the members of the NCLT Bench in their brief order said, adding a detailed order will be passed in and uploaded in due course.
“This Bench had honest intentions to prevent the company from going into liquidation, protect employees and save creditors including public sectors who had put in public money to get back maximum returns,” the NCLT Bench said. “We are passing this order because all our efforts to offer opportunity to investors to revive the company have gone in vain.” “We are saddened in the manner in which investors have misrepresented facts before us. We are therefore constrained to give further opportunity to investors to take over R&T,” the NCLT members noted in the order.
Reid & Taylor was launched by S Kumar’s Nationwide (SKNL) in India in 1998 with a fabric plant at Mysuru in Karnataka. The company had around 1,200 employees. SKNL is also facing bankruptcy proceedings.