Mumbai: Ten operational creditors of textile maker Alok Industries Ltd on Tuesday filed an interlocutory petition in the bankruptcy court, on the lines of a similar one filed by its employees last week, to consider a resolution plan submitted by Reliance Industries and J.M. Financial ARC, and save the debt-ridden company from liquidation.
As per law, three-fourth of a troubled company’s financial lenders must agree to a resolution plan before it is implemented.
In Alok Industries’s case, only 70% have agreed to the Reliance-JM Financial plan, exposing it to potential liquidation that employees and operational creditors are trying to avoid.
Typically, an interlocutory application is moved to seek urgent relief or to bring certain new facts to the knowledge of the court.
The liquidation value of Alok Industries is Rs4,200 crore, while the resolution plan from Reliance offers Rs5,050 crore upfront, the petition filed before the Ahmedabad bench of National Company Law Tribunal said. Mint has seen a copy of the petition.
“The Resolution Professional under the Code has no authority to decide on the liquidation of the corporate debtor (Alok Industries). It is the prerogative of the tribunal whether to pass the liquidation order under Section 33 of the Code or not,” the petition added.
The petitioners also asked NCLT to direct lenders not to pass a liquidation order until the disposal of the intervention application.
Alok Industries owes around Rs700 crore to its vendors, who are classified as operational creditors.
The petition claims Alok Industries has over 3,500 vendors and suppliers.
It was in the first list of 12 large accounts referred by the Reserve Bank of India for resolution under the Insolvency and Bankruptcy Code (IBC).
The petitioners include Alliance Superfine Industries Ltd, which is in the business of polyester texturized yarn and Kedia Texfab and Industries Pvt. Ltd and Vickey Fashions Ltd, which are engaged in cotton yarn and raw cotton.
“There does not appear to be any reason whatsoever as to why a resolution plan approved by 70% of the members of CoC, was rejected by 30% of the members of the CoC, without providing any apparent judicious and reasonable explanation as to their decision to force the corporate debtor into liquidation,” the petition said. The petitioners have sought NCLT’s intervention to direct the CoC to approve the resolution plan.
Last week, the Alok Employee Benefit and Welfare Trust representing around 12,000 permanent and other 6,000 temporary staffers had filed a similar application.
The tribunal will hear both petitions together on Wednesday. Senior advocate Shalin Mehta appearing for the operational creditors in the case confirmed the development but refused to comment anything since the matter is sub-judice. Ajay Joshi, the resolution professional for Alok Industries, declined to comment.