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Business News/ Companies / News/  Tilaknagar Industries’ Prag Distillery moves out of liquidation
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Tilaknagar Industries’ Prag Distillery moves out of liquidation

The National Company Law Tribunal (NCLT) has removed Prag Distillery from liquidation proceedings and allowed the reinstatement of the board of directors. Prag Distillery, a subsidiary of Tilaknagar Industries, had defaulted on loan repayments and filed for insolvency. After settling outstanding dues, the NCLT nullified preferential transactions and approved the withdrawal of the liquidation application. The decision allows Prag Distillery to resume management operations.

Tilaknagar Industries’ Prag Distillery moves out of liquidation (REUTERS/Vivek Prakash)Premium
Tilaknagar Industries’ Prag Distillery moves out of liquidation (REUTERS/Vivek Prakash)

NEW DELHI: The National Company Law Tribunal (NCLT) has directed the removal of Prag Distillery Pvt. Ltd., a wholly owned subsidiary of Tilaknagar Industries Limited, from the liquidation proceedings. In addition, the NCLT order permits the reinstatement of the board of directors to resume management operations. Located in Andhra Pradesh, Prag Distillery has an annual bottling capacity of approximately six lakh cases.

Tilaknagar Industries Ltd, known for the Mansion House brand, had previously reached an agreement with Standard Chartered Bank, the financial creditor of Prag Distillery, to settle all outstanding dues owed by the subsidiary. Pursuant to this agreement, Tilaknagar Industries made a payment of $2.25 lakh to Standard Chartered Bank on behalf of Prag Distillery.

Prag Distillery was admitted for the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC) in June 2017 by NCLT’s Mumbai bench. The application had been filed by Standard Chartered Bank (SCB), its financial creditor. It had defaulted on its loan repayments to the bank and its financial position was unsustainable and it was likely to become insolvent in the near future, nor did it have a viable business plan to turn around its financial situation.

In August 2018, NCLT ordered the liquidation of Prag. It was also alleged by the liquidator in 2019 that Prag filed an application with the NCLT alleging that certain preferential transactions had been carried out by the directors of the company prior to the initiation of the CIRP process. It was alleged that a transfer of 43.85 crore in preferential transactions had happened to Tilaknagar Industries Ltd during 2015-16 and 2016-17.

The liquidator expressed concern that these transactions had harmed the creditors of PDL and should be prevented. Upon investigation, the NCLT determined that the preferential transactions were indeed conducted and had adversely affected the interests of PDL’s creditors. Consequently, the NCLT issued an order to nullify the preferential transactions.

Now, TI, its parent company, had also entered into a settlement agreement with the only other financial creditor of Prag Distillery, DCB Bank Ltd., and settled their dues in full.

In addition, the company paid an amount of about 14 crore in full to settle all the operational creditors of Prag. Three of them had filed their claims before the liquidator. It has also settled all the dues owed to its subsidiary’s employees. Prag has about 100 employees.

Standard Chartered Bank approached the liquidator to withdraw the application filed against Prag Distillery which was approved by stakeholders with 100% votes. Pursuant to the same, the liquidator filed an application at NCLT for withdrawal from liquidation.

In an exercise of its discretionary power, the NCLT pronounced the order stating that Prag Distillery Pvt Ltd is out of liquidation and paved the way for the reinstatement of the company’s Board of Directors.

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ABOUT THE AUTHOR
Varuni Khosla
Varuni serves as a Senior Assistant Editor at Mint. Her responsibilities encompass crafting compelling narratives that take a deep dive into hospitality companies, the business of art, luxury brands, the intricacies of the business of sports, advertising and marketing landscapes, gaming insights, tourism and travel industry trends. She also covers alcohol commerce. She is skilled at communication, meticulous research, and insightful analysis keeping contemporary shifts and advancements within the lifestyle and business domains at the heart of her work.
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Published: 29 Jun 2023, 11:16 AM IST
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