The promoters of McLeod Russel India, the country’s largest tea producer in India, have reached a settlement with financial creditor, Techno Electric & Engineering, paving the way out of insolvency.
Aditya Khaitan, chairman and managing director, McLeod Russel India, did not comment. P P Gupta, managing director, Techno, said, “The matter stands closed to our satisfaction. This is now behind us and we wish the company good luck.”
The interim resolution professional (IRP) of McLeod Russel moved an application under Section 12A in the National Company Law Tribunal (NCLT) seeking withdrawal of CIRP of the corporate debtor, which was heard on Friday. An order was passed. It was not uploaded till the time of going to press.
“The consent terms entered between McLeod Russel and Techno Electric have been taken on record by the NCLT in a sealed cover while allowing the application filed under Section 12A filed by Techno Electric through the IRP. This brings an end to the corporate insolvency resolution process McLeod Russel India,” said Udit Gupta, counsel for Techno.
Eshna Kumar, counsel for Aditya Khaitan and erstwhile corporate debtor, said, “The release of McLeod Russel from the clutches of insolvency resolution process by the order of the NCLT, in its true spirit gazes through the intent of the legislature under Section 12A of the Code read with Regulation 30A of CIRP Regulations.”
“This was a case where Techno sent its withdrawl application to the IRP prior to the constitution of CoC. The order puts closure to the long drawn legal battle of two public listed companies,” she said.
The IRP’s application was based on an application filed by Techno for withdrawal of its insolvency application admitted by the NCLT on August 6.
The trigger for the insolvency application filed by Techno was a loan agreement for providing Rs 100 crore inter-corporate deposit (ICD). The agreement was subject to the condition that it would be utilized for the purpose of repayment of all loans relating to four estates due to banks and financial institutions to ensure that encumbrances created on the estates were released. McLeod had also mortgaged a property.
However, the title deeds relating to estates were not handed over to Techno and the loan amount was not repaid by the due date of March 31, 2019.
It is understood that the settlement involved the principal loan amount of Rs 100 crore that Techno and McLeod had entered into in 2018.
The settlement between Techno and McLeod is a relief for the industry as it is the largest tea producer, industry sources pointed out.
Sources close to the development indicated that an offer has been made to Gupta for a minority stake in McLeod. Promoters of McLeod would have to bring in equity as part of debt resolution being worked out with banks. Gupta could chip in then.
Banks had initiated the resolution process under the Reserve Bank of India (RBI) circular dated June 7, 2019. Most of the banks had signed inter-creditor agreement for arriving at and implementing the resolution plan. Some were in the process of being approved when McLeod was admitted for CIRP.
With the Techno issue resolved, banks could now move forward with the debt resolution, indicated sources. McLeod owes banks around Rs 1,800 crore; with unpaid interest, the amount would be around Rs 2,300-2,400 crore.
Source: Business-Standard