Ordering the liquidation of Bharati Defence, NCLT Mumbai said Edelweiss did not give a practical and viable plan to managethe affairs of BharatiDefence
Mumbai: The National Company Law Tribunal (NCLT) has ordered the liquidation of Bharati Defence & Infrastructure Ltd, rejecting a resolution plan of Edelweiss Asset Reconstruction Co. Ltd. In its 14 January order, the Mumbai bench of NCLT said Edelweiss did not give a practical and viable plan to manage the affairs of Bharati Defence.
The order said Edelweiss’ resolution plan proposed to pay ₹ 9 crore to operational creditors against dues of ₹ 187 crore. Also, they would be paid in a phased manner, and the new management would decide the sum and period of settling dues for each operational creditor. Alongside, Edelweiss proposed to pay ₹ 1,124 crore in a phased manner to financial creditors to which it owes ₹ 11,373.4 crore, implying a discount of 90%.
Edelweiss, which had acquired Bharati Defence’s loans from lenders, now holds 83% voting rights in its committee of creditors (CoC). In 2017, the ARC had referred Bharati to the bankruptcy court. Around 95% of lenders backed the Edelweiss resolution plan.
The NCLT order also noted the Edelweiss plan proposes ₹ 35 crore as insolvency resolution process costs before repaying other debt.
“During the hearing, the bench also expressed its concern over the huge fee charged by the RP and his team of few people, even though the company has a huge workforce. It is noted that monthly fee charged by RP and his team is approximately ₹ 80 lakh whereas monthly salary bill of around 850 staff is ₹ 1.5 crore, which indicates a huge fee to RP and his team," the order said.
As per the resolution plan, the insolvency cost was projected at ₹ 35 crore, whereas as per submission to the tribunal, it is approximately ₹ 62 crore as of August 2018.
“Considering the national importance attached to product line of the firm, the customers, explicitly ministry of defence, Indian Coastguard, Customs etc., order book size, advances paid by government departments, the work in progress stalled at various stages of production and huge number of workforce (around 850 employees), we direct that the liquidator shall endeavour to sell the corporate debtor company as going concern," said the division bench presided by judicial member V.P. Singh and technical member Ravikumar Duraiswami.
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