A dedicated bankruptcy court has admitted a plea filed by Beacon Trusteeship Ltd against Mumbai-based Modella Textile Industries Ltd after the company defaulted on its dues to the tune of about Rs 502 crore.
Interestingly, the company has argued that it has mortgaged several properties worth around Rs 906 crore in favour of the financial creditor to secure loans allegedly payable against the debentures issued.
For one of the land parcels spread over around 14 acres in Thane, the company has entered into commercial negotiations with two realty developers for joint development of certain residential and retail real estate projects. The company has also received interest from seven developers to acquire a separate 4-acre land parcel in Thane.
The Mumbai bench of the National Company Law Tribunal, while allowing the plea, has also appointed Bhrugesh Amin as interim resolution professional (IRP) of the company to initiate Corporate Insolvency Resolution Process (CIRP) against the company.
Beacon Trusteeship Ltd had approached the Mumbai bench of the National Company Law Tribunal (NCLT) on behalf of
Asset Reconstruction Company Ltd after the company failed to repay its dues as per the debenture trust deed of 2017.
“This Bench is of view that the Corporate Debtor is making excuses of Mortgage and the Debenture Trust Deed and trying to avoid the liability,” said the bench led by judicial member Kishore Vemulapalli and technical member Rajesh Sharma in its 20-page order.
“The order of moratorium shall have effect from the date of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan,” said the tribunal in its May 4 order.
The counsels for the debenture trustees argued that the outstanding amount due towards the debt from the
Textile Industries was over Rs 502 crore and the account was declared as Non-Performing Asset (NPA) on June 25, 2019.
“The entire debt is secured and shared by the term loan facility granted by Edelweiss Asset Construction Limited,” argued advocate Nausher Kohli, while appearing for the debenture trustees.
While countering this, counsel for the Modella Textile Industries argued that the company has mortgaged several properties in favour of the financial creditors as per the debenture trust deed of 2017 to secure the amounts allegedly payable against the debentures issued by it.
The company further argued that the default amount claimed by its lender is over Rs 502 crore whereas the security granted by the company is around Rs 906 crore, which far exceeds the amount of the claimed default.
According to the lender, the debt is payable under 3,100 Non-Convertible Debentures (NCDs), each having a value of Rs 10 lakh issued via private placement and currently held by the debenture holder aggregating to an amount of Rs 310 crore. ECL Finance was the original debenture holder that later on assigned its debt to Edelweiss Assets Reconstruction Company in June 2019.
The NCDs were issued for the purpose of development and construction of the project called ‘Sports City’ and meeting the project-related expenses, being constructed on 14.3 acres of land in Thane.
