Innoventive Industries, India’s first company to be tried under the new Insolvency and Bankruptcy Code, has failed to finalize a debt resolution plan in the stipulated six months, prompting the National Company Law Tribunal (NCLT) to extend the deadline by another three months – the maximum permissible – before liquidation.
If the company fails to resolve the debt problem in the next three months with banks taking a haircut and promoters bringing in equity, it would face liquidation. The company manufactures steel tubes and auto parts for various large auto companies.
As creditors and the borrower could not conclude on the revival plan, they agreed on seeking the additional time, three sources familiar with the matter told ET. “The promoter may too bid for the company on a personal capacity, a move aimed at preventing a possible liquidation of the company as there is disagreement over the revival plan,” said one of the persons cited above.
On January 17, largest private sector lender ICICI Bank dragged it to Mumbai NCLT. The company had to pay about Rs 1,300 crore to a group of 21 financial creditors, including Bank of India, SBI-IFB Pune, Bank of Maharashtra, IDBI Bank.
ICICI Bank and Innoventive Industries did not respond to ET’s emails seeking comments on the matter.
There are about 90 operational creditors that supplied goods and services to Innoventive Industries but did not receive their dues in full.
Dhinal Shah, a partner at Ernst & Young, is the insolvency professional looking after the company’s day-to-day operations.
Innoventive is the second firm after Kolkata-based specialised cable maker Nicco Corporation to get an extended lease of life for debt resolution. But, the Pune-based company’s outcome could well set a precedence for numerous cases coming for insolvency proceedings as it was the first to be admitted under Insolvency and Bankruptcy Law, 2016, but the proceedings were mired in legal disputes.
“It will be very interesting to see the outcome of the resolution exercise and what would be the real intent of the promoters in this case. It went through a legal turmoil, and everyone is keen to see whether it comes around or goes for liquidation,” said Mamta Binani, a resolution professional and past president of the Institute of Company Secretaries of India.
During 2015-16, the company reported a net loss of Rs 175 crore, compared with Rs 213 crore a year before, marking the third consecutive annual loss.
Source: Economic Times