180-day moratorium: 3 of 4 firms seek extension, one goes for liquidation

Insolvency process has gathered momentum in the country with the National Company Law Tribunal (NCLT) taking a call on whether to extend the 180-day moratorium for restructuring companies or liquidating their stocks.

Four of the earliest cases were UB Engineering, Innoventive Industries, Nicco Corporation and Synergies Dooray. While the first three of these companies have sought an extension, the last one to go for liquidation.

Vijay Mallya-led UB Engineering’s case was admitted on January 19. Its 180-day moratorium will end on July 18. The company has been granted an extension of 90 days for the completion of the resolution process.

After the case was admitted, an interim resolution professional had been appointed for a period of one month. After the expiry of one month, the creditors demanded change in resolution professional. This happened four months later, in May.

With no resolution plan to pose, the company applied for an extension of 90 days. The NCLT has granted it time till October to finish resolution, failing which its assets will be liquidated. The company has liabil- ities worth ~450 crore. In this case, the company had filed the insolvency petition in order to restructure its business. Trading in the company's stocks has been suspended due to penal reasons.

Another case where the company has three additional months for resolution is Innoventive Industries. In this case, ICICI Bank, one of financial creditors, had filed for insolvency to recover dues. The company has liabilities worth ~900 crore.

This case caused one of the first stumbles for the insolvency regulator — the Insolvency and Bankruptcy Board of India (IBBI) — as the company challenged the code, which says that the banks can liquidate the company’s assets. A writ petition was filed in the Bombay High Court to this effect. The matter finally went to the National Company Law Appellate Tribunal (NCLAT) where the case was admitted. Trading in the company’s stock has been suspended for penal reasons.

Nicco Corporation has also been given an extension of 90 days. In each of the three cases, the company’s assets will be liquidated if the resolution plan isn’t completed within the stipulated time.

The fourth company, Synergies Dooray, has decided not to apply for an extension to complete the resolution process, say sources close to the development.

The company has instead chosen the liquidation route. Synergies Dooray was one of the cases that came from the Board for Industrial and Financial Restructuring (BIFR). It was registered with the BIFR in 2005.

With the advent of the insolvency and bankruptcy regime, the case was transferred to the NCLT. The company used to provide automobile parts to leading players such as Ford.

Four of the earliest cases were UB Engineering, Innoventive Industries, Nicco Corporation and Synergies Dooray