Lenders to Bombay Rayon Fashions have rejected all the resolution plans received for various assets of the textile manufacturer. The Mumbai-based company has admitted liabilities of ₹7,234 crore, including ₹6,690 crore financial dues.
In March, over a dozen companies including Lalbhai Group-promoted Arvind, as well as entities of the Donear Group, Welspun Group and JM Financial had shown interest in acquiring the company through the insolvency resolution process.
On Thursday, the company’s resolution professional (RP), Satish Kumar Gupta, informed stock exchanges that its committee of creditors (CoC) has decided to reject all resolution plans received for various assets of the company.
JM Financial Asset Reconstruction Company and JM Financial Properties submitted expressions of interest for all categories of its assets. While JM Financial ARC holds 91% of the admitted financial claims, the remaining 9% is by Axis Bank.
Other applicants that submitted expressions of interest included Rashmi Metaliks, Khandwala Finstocks, Linen Arts and Dev Land & Housing.
“The extended CIRP period for Bombay Rayon Fashions is set to expire next week and the next step would be for the RP to file an application for liquidation. However, given the number of resolution plans received and that the IBC tends to favour resolution over liquidation in the best interests of all stakeholders, the NCLT is likely to question the RP on the reasons that none of the resolution plans were acceptable,” said Aparna Ravi, partner at law firm Samvad Partners.
“This case is also different from the typical situation as separate resolution plans were sought for different categories of assets of Bombay Rayons Fashion and resolution applicants were free to submit plans for all or some of the categories,” Ravi said. “Even if a liquidation order is passed, these assets could be sold on a going concern basis in liquidation.”
“Once a proposed resolution plan is rejected by the CoC in its commercial wisdom, the same is placed before the Adjudicating Authority (AA),” said Yogendra Aldak, partner at Lakshmikumaran & Sridharan Attorneys. “It has been the consistent view of the courts that AA is not vested with the power to modify the resolution plan or to re-evaluate it. Upon rejection of the resolution plan, AA has no option, but to initiate the liquidation process as per Section 33(1) of the IBC.”