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
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
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.