NCLT clears shoemaker's resolution plan, move to benefit 2,000 workers

The National Company Law Tribunal (NCLT) has accepted a resolution plan for shoe manufacturer AceStar. The move, claimed to be the first such in Tamil Nadu. will benefit more than 2,000 workers of the company, along with the creditors, with no haircut in terms of their outstanding debt.

According to the NCLT order, the resolution plan submitted by AceStar Properties Pvt Ltd provides that all the creditors of the corporate debtor, including the banks, operational creditors, workmen and employees of the company under CIRP, Forward Shoes (India) Pvt Ltd, and statutory authorities, shall be paid in full and there is no haircut taken by any of the creditors. Besides, those creditors that have not submitted their claims may also be paid in ordinary course of business gradually.

"This is the first resolution plan from Tamil Nadu to benefit more than 2,000 workmen and employees, 250 operational creditors, financial credtor and statutory authorities with no haircut. There is a chance for Forward Shoes to revive its business, after all this," said Kavita Surana, the Resolution Professional appointed by the NCLT for the Resolution Process.

According to the plan, 10.15 acres of land where the company's factory is located in Tamil Nadu will be developed into a residential and commercial property by AceStar Properties, following the regulations, and generate estimated Rs 5.12 billion. As much as 31 per cent of its top line, around Rs 1.58 billion, will be available for the shoe manufacturer to pay off all its outstanding debt.

The realisable value of the property would increase 227.74 per cent after the successful deevelopment of the land and around Rs 20 crore will be left with Forward Shoes, after settlement of all the due4s relating to all categories of lenders, which it can use for its revival purposes, says the order issued by Ch Mohd Sharief Tariq, member (Judicial), NCLT, Chennai.

The resolution plan has received 100 per cent voting share for approval from the Committee of Creditors and the NCLT, taking this into account, passed an order to implement the plan as per the proposal.