Mumbai: A resolution plan for Alok Industries Ltd submitted jointly by Reliance Industries Ltd (RIL) and JM Financial Asset Reconstruction Co. was not approved by the committee of creditors (CoC), RIL said in a stock exchange notification on Sunday.
The textile company was 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 owes over Rs29,600 crore to lenders. State Bank of India is the lead banker.
“As intimated earlier, Reliance Industries Limited in conjunction with JM Financial Asset Reconstruction Company Limited submitted a resolution plan for Alok Industries Limited. We have been informed that our plan did not meet with the approval of the Committee of Creditors of Alok Industries as required under the Insolvency and Bankruptcy Code," Reliance Industries said.
The reason for rejection and the next course of action for Alok Industries were not known immediately.
For Alok Industries, the 270-day deadline prescribed under IBC to approve the resolution plan ended on 14 April.
According to the Insolvency and Bankruptcy Code, if the resolution plan is not approved within the given timeline, the assets of the companies go into liquidation.
“The bid entailed huge haircut for lenders. Since this was the only bid, we will have now to await further details from the resolution professional," said a senior official of a state-owned bank on condition of anonymity.
Ajay Joshi, resolution professional for Alok Industries, was not reachable for comments.
A text message to him remained unanswered.
According to an Economic Times report dated 12 April, the liquidation value of the company was pegged at Rs4,200 crore.
In December 2017 quarter, Alok Industries reported a net loss of Rs4,745 crore. Its total liabilities as on 31 December exceeded total assets by Rs13,891 crore.
This development comes at a time the deadline to resolution plan for other large companies, part of the RBI list, is nearing.