Mallya’s UB Engg nears liquidation
The Vijay Mallya-led UB Engineering, the first case to be admitted under the National Company Law Tribunal (NCLT) for financial restructuring, is on the verge of liquidation. The insolvency process has not yet begun, even as it nears the end of a 180-day moratorium.
A committee of creditors, including IDBI and Axis Bank, had not approved the final resolution professional until a few days earlier. The case was admitted on January 19. Its six months will end in July.
“Banks were not happy with the interim resolution professional appointed by the company,” sources told Business Standard.
While the committee had to take a call on a new professional within a month, the final one was appointed four months after the company’s case was admitted under NCLT.
The company has time till July to complete the financial restructuring under the Insolvency and Bankruptcy Code.
The proceedings hadn’t begun as there was no fullfledged professional. The company has to issue an advertisement inviting proposals for its sale, failing which it will either restructure itself or go in for liquidation.
The company owes creditors around ~450 crore. It had filed for insolvency, hoping to restructure its books.
Two other companies of the group — Gupta Coal India and Gupta Energy — are facing problems in the insolvency procedure, as banks have not sanctioned raising funds to continue business.
“Banks opposed the company’s plan to appoint IDBI’s subsidiary for ~20 lakh to finalise valuations. Because of this, there is no valuation and the insolvency proceedings cannot begin,” a source said. One such lender opposing the move was Bank of India.
Nagpur-based Gupta Coal India had filed for insolvency at NCLT in March. According to the petition, there are liabilities of ~2,580 crore towards eight lenders — Allahabad Bank, ICICI Bank, Indian Overseas Bank, Union Bank of India, Vijaya Bank, IDBI Bank, Punjab National Bank and Bank of India.
IDBI bank did not comment on the issue. An Axis bank spokesperson said, “Due to client confidentiality, Axis Bank does not want to comment on any matters in the public domain.” Bank of India, too, did not respond to Business Standard’s query.