Reid & Tay­lor: NCLT Seeks Info on In­vestor’s Fin Health

Seeks earnest money de­posit af­ter proof sub­mit­ted by in­vestor backed by Reid & Tay­lor staff union could show net worth of just .₹ 7 cr

The Economic Times - - Finance & Commodities - Joel.Re­[email protected] times­group.com

Mum­bai: A two-judge bench of the NCLT has asked the Hong Kong-based in­vestor, backed by the Reid & Tay­lor (R&T) em­ploy­ees’ as­so­ci­a­tion, to tell the court within 24 hours the amount of earnest money de­posit (EMD) it can keep with the res­o­lu­tion pro­fes­sional to in­di­cate suf­fi­cient bal­ance sheet strength for ac­quir­ing the debt-laden ap­parel maker.

The court stepped in af­ter doc­u­ments sub­mit­ted by the in­vestors could prove net worth of only around .₹ 7 crore in In­dian cur­rency.

Ini­tially, the court had asked the Hong Kong-based in­vestor SPGP Hold­ings to fur­nish .₹ 50 crore within a week.

But it re­lented af­ter the coun­sel for the em­ploy­ees’ as­so­ci­a­tion ar­gued against it, ask­ing to be al­lowed to sub­mit a res­o­lu­tion plan in­stead.

“How can you take over a com­pany with over .₹ 4,000 crore of debt with just .₹ 7 crore?” Jus­tice Bhaskar Mo­han asked the lawyer rep­re­sent­ing the em­ploy­ees. “Pay .₹ 50 crore within a week as a re­fund­able de­posit to the RP and all the com­pany data

How can you take over a com­pany with over 4,000 crore of debt with just 7 crore? Pay 50 crore within a week as a re­fund­able de­posit to the RP and all the com­pany data will be avail­able to you. If you are shoot­ing for the stars, you should at least be able to hit the trees

….They will be in a po­si­tion to come back to this bench with the amount of money that can be de­posited as

EMD be­fore fil­ing the res­o­lu­tion plan. It is also nec­es­sary the in­vestor be present in court

— Jus­tice Bhaskar Mo­han

NCLT Bench

will be avail­able to you. If you are shoot­ing for the stars, you should at least be able to hit the trees,” the judge said.

Lenders and fi­nan­cial cred­i­tors have raised doubts over the sources of funds of SPGP and Mon­day’s hear­ing deep­ened those doubts.

Jus­tice Mo­han also asked the di­rec­tor of SPGP to be present in the court for the next hear­ing sched­uled for Jan­uary 15.

“….They will be in a po­si­tion to come back to this bench with the amount of money that can be de­posited as EMD be­fore fil­ing the res­o­lu­tion plan. It is also nec­es­sary the in­vestor be present in court,” the judge said.

R&T owes lenders led by IDBI a to­tal of .₹ 4,100 crore. Edel­weiss ARC, one of the cred­i­tors, had dragged the com­pany to the Na­tional Com­pany Law Tri­bunal (NCLT) in March 2018.

The case was ad­mit­ted in April 2018 and is well past the max­i­mum 270 days per­mit­ted un­der the bank­ruptcy code.

Cred­i­tors, in­clud­ing Mum­baibased NBFC Fin­quest Fi­nan­cial So­lu­tions, which has an out­stand­ing of .₹ 815 crore, want the com­pany to go into liq­ui­da­tion as they have not been able to find a cred­i­ble in­vestor for all these months.

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