The National Company Law Tribunal, Kolkata Bench, on Friday, admitted an application for initiating a corporate insolvency resolution process (CIRP) against McLeod Russel India, the country’s largest bulk tea producer and part of the Brij Mohan Khaitan group.
In a filing with the stock exchanges, the company informed that NCLT, Kolkata Bench, had admitted an application filed by IL&FS Infrastructure Debt Fund under Section 7 of the Insolvency and Bankruptcy Code (IBC).
McLeod Russel sources said that it would appeal against the order in the National Company Law Appellate Tribunal (NCLAT) and indicated that discussions with IL&FS were also on for a settlement.
“We are engaging with IL&FS and at the same time we will go through the normal appeal process,” the sources added.
IL&FS sought to initiate CIRP against McLeod Russel in connection with a default in payment in 2019. The amount as on November 12, 2019 was Rs 347.47 crore, of which the principal amount is about Rs 252.66 crore.
The default in payment pertained to two group companies of McLeod Russel – Babcock Borsig (Rs 150 crore) and Williamson Magor & Company (Rs 99.5 crore); McLeod had executed a shortfall undertaking in favour of the financial creditor.
A clause in the undertaking said on a breach by Williamson Magor and Babcock of its obligation to maintain the required amounts in the debt service reserve account (DSRA) under the respective debenture trust deeds, McLeod would have an irrevocable and unconditional obligation towards the financial creditor to meet any shortfall.
The tribunal found that a financial debt exists, which has been defaulted by McLeod Russel and accordingly the application of IL&FS Infrastructure Debt Fund for initiating CIRP against McLeod Russel was admitted and an interim resolution professional appointed.
This is not the first time that McLeod has been admitted for CIRP.
In August 2021, the NCLT, New Delhi Bench, had admitted an application by Techno Electric & Engineering Company under Section 7 of the IBC. However, the application was withdrawn after a settlement.
The CIRP comes at a time when McLeod has entered into exclusive talks with Carbon Resources for a one-time settlement of its debt to lenders. McLeod’s bank debt is understood to be in the range of Rs 1,600 crore.
