NCLT okays first insolvency resolution scheme under IBC

The National Company Law Tribunal (NCLT) on Monday pronounced the first insolvency resolution order under the Insolvency and Bankruptcy Code, 2016, (IBC) in the matter of Synergies-Dooray Automotive Ltd, a maker of alloy wheels for cars.

The firm’s plea for insolvency was admitted on January 23. The resolution plan was submitted to NCLT on July 21, within the 180day period as envisaged by the code, and the tribunal approved the plan on August 2. The final order was uploaded on the NCLT website only on August 14.

The total claim amount against Visakhapatnam-based Dooray from financial creditors, including three asset reconstruction companies (ARCs), stood at ₹972 crore and the cost of the proposed scheme is ₹54 crore.

The financial creditors involved in the proceedings are Alchemist ARC Ltd, Edelweiss ARC Ltd, Synergy Castings Ltd and Millennium Finance Ltd.

The proposed scheme as per the NCLT, Hyderabad, order involves merging SynergiesDooray with Synergies Castings, a creditor and so-called related party. It also involves the financial restructuring of the dues of financial and operational creditors, payment of dues to the government, and an infusion of capital from the promoters.

The resolution plan is to be funded against receivables from other corporate debtors and through operations. The payments to the creditors and the government will be staggered over the next three years at a deep haircut, where only the principal amount will be paid.

Sekhar Movva, president of Synergies-Dooray, did not respond to phone calls and a text message.

According to the NCLT order, the merged entity will be exempt from stamp duty. The interest, penalties on sales and service tax will also be waived by the Andhra Pradesh government.