Lenders begin proceedings against Murli Industries under bankruptcy code
MUMBAI: A group of lenders led by Edelweiss Asset Reconstruction Co have dragged Nagpur based Murli Industries to the national company law tribunal (NCLT) in what is so far the largest case filed under the new insolvency code by lenders.
Murli Industries, a cement, paper and soya oil company owes lenders Rs 1,800 crore by a group of lenders led by Edelweiss Asset Reconstruction Co which owns 60% of the debt. Other lenders are led by state-owned Bank of Baroda with 25% of the debt, while the remaining debt is with other asset reconstruction companies including ARCIL.
Under the Insolvency and Bankruptcy Code, 2016 which came into effect in December, lenders have to approach NCLT with a concrete revival plan which if approved has to be set in motion within 180 days.
“This company has been defunct for many months now as a result of which many jobs have been lost. Resolution professionals from Deloitte are helping us revive the company which we hope will help us bring back 1000 jobs,” said a person familiar with the case.
The new code provides for professional management to take over the company to help revive it, which in turn will create value for the lenders who control the company. In case of Murli Industries professionals from Deloitte could take over management.
“We have a plan for revival to create the best value for the company which was created after a lot of work. This is so far the biggest case by the lenders,” said the person.
Last year the Nagpur bench of debt recovery tribunal (DRT) had barred Murli Industries from selling or mortgaging its and prevented the directors of the company from leaving the country without prior permission.
The company’s directors are all from the Nagpur based Maloo family. The bank’s stock is currently suspended from trading.
Last year the Board for Industrial and Financial Reconstruction (BIFR) had ordered a special investigative audit of the company, after the directors had not co-operated. Lenders have alleged that the company had opened bank accounts in violation of Reserve Bank of India (RBI) rules and siphoned off funds.
Murli Industries, a cement, paper and soya oil company owes lenders Rs 1,800 crore by a group of lenders led by Edelweiss Asset Reconstruction Co which owns 60% of the debt. Other lenders are led by state-owned Bank of Baroda with 25% of the debt, while the remaining debt is with other asset reconstruction companies including ARCIL.
Under the Insolvency and Bankruptcy Code, 2016 which came into effect in December, lenders have to approach NCLT with a concrete revival plan which if approved has to be set in motion within 180 days.
“This company has been defunct for many months now as a result of which many jobs have been lost. Resolution professionals from Deloitte are helping us revive the company which we hope will help us bring back 1000 jobs,” said a person familiar with the case.
The new code provides for professional management to take over the company to help revive it, which in turn will create value for the lenders who control the company. In case of Murli Industries professionals from Deloitte could take over management.
“We have a plan for revival to create the best value for the company which was created after a lot of work. This is so far the biggest case by the lenders,” said the person.
Last year the Nagpur bench of debt recovery tribunal (DRT) had barred Murli Industries from selling or mortgaging its and prevented the directors of the company from leaving the country without prior permission.
The company’s directors are all from the Nagpur based Maloo family. The bank’s stock is currently suspended from trading.
Last year the Board for Industrial and Financial Reconstruction (BIFR) had ordered a special investigative audit of the company, after the directors had not co-operated. Lenders have alleged that the company had opened bank accounts in violation of Reserve Bank of India (RBI) rules and siphoned off funds.
