The bankruptcy court has allowed a petition filed by an operational creditor of Bombay Rayon Fashions Ltd (BRFL) to admit the company for the corporate insolvency resolution process (CIRP) and appointed Santanu T Ray of AAA Insolvency Professionals as its resolution professional.
The Mumbai bench of the National Company Law Tribunal (NCLT) admitted the plea filed by Vikash Parasprampuria of Chiranjilal Yarn Traders against the textile maker.
Bombay Rayon, in a filing with stock exchanges, said Prashant Agrawal, a member of its suspended board, has decided to appeal the ruling at the appellate tribunal.
“Corporate debtor (BRFL) had time and again by its letter, invoices and by making part payment acknowledged its liability. Therefore, the petition made by the creditor is complete in all respects as required by law,” said an NCLT division bench of members Kishore Vemulapalli and Rajesh Sharma in its order of June 7. “Therefore, we find that it is a fit case for initiation of CIRP.”
As per a stock exchange filing, the company had reported a net sale of Rs 108.77 crore and loss of about Rs 300 crore in fiscal 2021.
The tribunal has now restrained Bombay Rayon executives from transferring, encumbering, alienating or disposing of the company’s assets.
“The process as per law is ongoing. A public announcement has been made and claims are invited from creditors,” said resolution professional Ray.
According to Shahezad Kazi, partner at law firm S&R Associates, so long as the NCLT insolvency admission order was not stayed or set aside, the corporate debtor’s admission into insolvency would remain operative. “The legal course of action available to a party aggrieved is to file an appeal against the NCLT order before the appellate tribunal. After admission into insolvency, the NCLT may allow withdrawal of the insolvency petition provided first a committee of creditors (CoC) is formed; and second, 90% of such CoC consents to the withdrawal,” added Kazi.
Since the inception of the Insolvency & Bankruptcy Code, several textile and clothing brands — including Digjam, Alok Industries, Reid & Taylor India, S Kumars Nationwide, Mandhana Industries and Provogue — have been referred for debt resolution.
