Feels move will help fetch better valuation than the tribunal-appointed liquidator
Setting a precedent, the bankruptcy court has allowed Finquest Financial Solutions, one of the lenders of defunct the Reid & Taylor India (RTIL), to take symbolic possession of the properties of the textile maker and proceed with the sale of its assets. On Friday, the Mumbai bench of the National Company Law Tribunal (NCLT) allowed the petition of Finquest Financial to sell or dispose of the secured assets of RTIL to fetch better valuation than the tribunal appointed liquidator Ravi Shankar Devarakonda. “The liquidator is hereby directed to hand over the symbolic possession of the fixed assets of the corporate debtor (RTIL) to the applicant (Finquest) to enable the applicant to proceed with the sale of the assets,” said a division bench of BhaskarPantulu Mohan and V Nallasenapathy. “Further, the liquidator is directed to inform this bench the manner and the progress in which the applicant is proceeding with the sale of the assets from time to time for further directions/instructions from this bench,” said the order. On February 5, the tribunal had ordered the liquidation of the company after investors put up by the employee’s associations and other bidders failed to come up with a viable revival plan. The company owed about Rs 5,000 crore to lenders. Mumbai-based Finquest, to whom the RTIL owed around Rs 775 crore, is sole first charge holder over all the fixed assets and it has first pari-passu charge over the current assets of the RTIL. The assets of the company including a 16-acre land parcel in Mysore, stocks of raw materials, semi-finished and finished goods, consumable stores and spares including book-debts and receivables among other things will be disposed of by Finquest.
Edelweiss Asset Reconstruction Company, the firm which had also filed an insolvency case to recover Rs 66 crore, opposed the Finquest move arguing that the tribunal does not have the jurisdiction to determine disputes regarding validity or existence of the pari-passu charges of secured creditors over the same asset. “The entire pleadings and the supportive documents filed by the Edelweiss does not substantiate their claim that they are the first charge holders,” observed the tribunal while allowing Finquest Financials’ application to sell the assets of the Reid & Taylor India. Last April, the tribunal admitted an insolvency application filed by Edelweiss Asset Reconstruction Company (ARC) against Reid & Taylor (India), a fashion brand once endorsed by superstar Amitabh Bachchan. “The order will surely set the precedent for future cases where the secured lenders or first charge holders of Defaulter Company will be in a position of maximisation of assets of the debtor company,” said NishitDhruva, managing partner of law firm MDP Partners that represents one of the financial creditors Finquest in the case.