The National Company Law Tribunal (NCLT) on Tuesday admitted insolvency proceedings against textile company Alok IndustriesBSE -0.35 %, which owes about Rs 23,000 crore to a consortium of lenders.
An application for insolvency was filed on June 29 by State Bank of India—one of the lenders to the company—which is taking the lead in recovering its Rs 3,772 crore loan to the company. The other lenders include Punjab National Bank, Bank of Baroda, IDBI Bank, Standard Chartered Bank and DBS Bank.
Ajay Joshi has been appointed as the interim resolution professional, and he will help draw up a plan to run the company’s day-to-day operations, at least for the next 30 days. A committee of creditors will be formed to supervise all activities of the beleaguered company following the normal procedures.
The tribunal, however, dismissed an application by Industrial Commercial Bank of China (ICBC) which aimed to stop or defer it from passing an order on SBI’s application. ICBC is a creditor to the company with about Rs 350 crore exposure.
The counsel for SBI opposed ICBC’s move saying there is no legal bar on NCLT from passing an order, and that there can be a bar in the case only if an official liquidator is appointed, referring to a Bombay High Court case.
ET had reported more than a year ago that HSBC, on behalf of a consortium of unsecured lenders led by VTB Capital, had filed a petition to liquidate Alok Industries. ICBC is a part of that consortium.
ICBC’s contention was that if any order is issued in the SBI vs Alok case, it will impact the winding up petition in the high court. ICBC appealed to the court to either dismiss or defer SBI’s petition, a move that would have enabled the lender to approach the high court to expedite the winding-up case.
