On a day when the National Company Law Tribunal (NCLT) endorsed ArcelorMittal’s bid to take over Essar Steel, the tribunal also gave the green light to a ₹5,050-crore joint bid by Reliance Industries Ltd. (RIL) and JM Financial Asset Reconstruction Company to acquire debt-ridden textile manufacturer Alok Industries.
In July 2017, the Ahmedabad bench of the NCLT had admitted insolvency proceedings against the textile company under the Insolvency and Bankruptcy Code (IBC). According to the details of the case, Alok Industries owed its lenders ₹29,500 crore and was taken to NCLT under the newly-instituted IBC.
However, against the total dues of ₹29,500 crore, RIL and JM Financial had jointly made a bid to acquire it for just ₹5,050 crore, which meant that the lenders had agreed to take about 83% haircut on their dues. SBI alone has ₹3,000 crore dues from the bankrupt textile manufacturer.
The Committee of Creditors (CoC) had rejected the RIL-JM Financial bid for Alok Industries twice earlier. Alok Industries is one of the first 12 corporate NPA accounts in which the corporate insolvency resolution process (CIRP) was initiated by the authorities under the IBC following the RBI’s direction.