The bankruptcy court in Kolkata has approved the Simplex Projects revival plan submitted by its promoter Sudarsshhan Das Mundhra.
Before the National Company Law Tribunal (NCLT) nod, the company’s lenders approved the plan with 99.51% voting in favour of Mundhra’s resolution plan. The plan involves a proposal to pay Rs 235.28 crore against the total admitted liabilities of Rs 2,108.49 crore.
The Kolkata-based infrastructure developer is a medium enterprise under the Micro, Small, and Medium Enterprises Development Act, 2006. Under Section 240A of the Insolvency & Bankruptcy Code (IBC), the promoters of a company registered under the MSME Act can participate in the bidding process to acquire the company through the bankruptcy process.
An enterprise up to an annual turnover of Rs 250 crore can qualify as a medium enterprise.
BDO India’s Insolvency Entity helped the company’s resolution professional (RP) Sutanu Sinha with the resolution of Simplex Projects.
Section 29A of IBC bars a person or promoter who has an NPA (non-performing asset) classified account of the corporate debtor under their control from taking part in the insolvency resolution of the corporate debtor.
“While the intent seems logical, it also opens up a loophole to be exploited. We are seeing practically that a lot of defaulting promoters are trying to exploit the exemption provided to find a back door way to submit a resolution plan for the company and regain control taking advantage of a significant haircut,” said Rohit Jain, managing partner at law firm Singhania and Co. “We are also noticing that erstwhile promoters have a significant advantage over other third parties interested in submitting resolution plans as erstwhile promoters have better insights about the actual health of the company.”
The company’s primary financial creditors include the State Bank of India (Rs 286 crore), UCO Bank (Rs 213 crore), Axis Bank (Rs 193 crore) and Bank of Baroda (Rs 183 crore).
In April 2022, the company was admitted under the corporate insolvency resolution process through an application filed by its financial creditor, State Bank of India. Rathi Industries Ltd was another bidder to throw its hat to acquire the company through the insolvency resolution process.
A total of 7,813 companies across sectors were brought into administration until June-end, according to the latest data from the Insolvency & Bankruptcy Board of India.
A total of 1,005 or about 12.86% cases were settled through the approval of the successful resolution plan since the inception of the IBC in 2016, the data showed.
