Mumbai: Dena Bank and Kotak Mahindra Bank Ltd, two dissenting financial creditors of debt-ridden textile maker Alok Industries Ltd, have withdrawn their applications against the resolution professional (RP) from the bankruptcy court, after being assured of recovery at par with lenders who had approved the resolution plan, court documents showed.

“It is further requested that Dena Bank shall be treated at par with the assenting financial creditor for payment of the money under the resolution plan dated 12 April, 2018, in view of the order passed by the National Company Law Appellate Tribunal (NCLAT) dated 12 September," said an order by the Ahmedabad NCLT on 22 October.

Dissenting financial creditors are those lenders who have either abstained from voting or voted against the resolution plan approved by the committee of creditors (CoC).

The appellate tribunal—NCLAT—had clarified in its order in a different case on 12 September, 2018 that “no discrimination can be made between the financial creditors in the resolution plan on the ground that one has dissented and voted against the resolution plan or the other has supported and voted in favour of the resolution plan".

Both banks had earlier objected to Reliance Industries (RIL)-JM Financial ARC resolution plan for Alok Industries which envisaged buying the company, which owes lenders 29,600 crore, for just 5,050 crore. The liquidation value of Alok Industries is 4,200 crore, while the resolution plan from Reliance offered 5,050 crore upfront.

A lawyer aware of the development said, both the lenders have been assured by the committee of creditors (CoC) that they will be at par with other creditors in terms of loan recovery. “Kotak Mahindra Bank was the first one to approach the Ahmedabad bench of the National Company Law Tribunal (NCLT) and Dena Bank followed," he said.

Emails send to Dena Bank, Kotak Mahindra Bank, resolution professional Ajay Joshi and Reliance Industries did not elicit any response.

The textile company is among the 12 large stressed assets identified in June 2017 by the Reserve Bank of India (RBI), where lenders were directed to initiate proceedings under Insolvency and Bankruptcy Code (IBC).

The company’s resolution plan was initially rejected by lenders in April 2018 after only 70% voted in its favour. However, lenders re-voted on the proposal in June 2018 after the government lowered the CoC approval threshold from 75% to 66%. This time, 72% lenders approved RIL’s resolution plan.

The Financial Express reported on 26 April that steps taken by the resolution professional (RP) for Alok Industries to recover trade outstanding to the tune of 11,622 crore from 5,293 debtors of the textile company remained unsuccessful as 2,467 of them could not be traced.

“Debtors were not locatable at the addresses that were provided by Alok Industries," the Financial Express said, citing documents, understood to have been made available to the CoC ahead of a meeting scheduled for 13 April under the IBC process. It said Damania & Varaiya, a chartered accountancy firm, appointed after the fourth CoC meeting to conduct an independent verification of the transactions (trading transactions) and a forensic audit conducted by Grant Thornton — for the period 1 April 2012, to 31 March 2015 — found “no malfeasance on the part of promoters of the Alok Industries or any transfer involving siphoning of funds was observed".