But, there is twist! For the first time under Insolvency and Bankruptcy Code, the dedicated bankruptcy court has mandated to liquidate the company as an “on-going concern”, which is aimed at protecting about 10,000 people from unemployment or joblessness.
“It is further state that by closing the company and by discharging 1,178 employees, their families, numerous small vendors, suppliers, contractors, job workers and transporters of the company totalling about 10,000 people will also be affected,” Jinan K R and V P Singh said in their order at NC LT Kolkata.
“A going concern” or “a slump sale of the assets” enables the sale of business of the company including all its assets and properties. The business of the company is continued during the liquidation process by the liquidator.
The court has appointed Sumit Binani, the resolution professional as the official liquidator. The court has granted three-months to complete this process, failing which it will be liquidated through normal procedure leading to job losses.
The reserve price shall be equal to the total debt amount including interest, the court said.
Under normal liquidation process, the company operation is shut first and then assets are sold to realise value. Slum sale of assets is expected fetch higher value realisation.
The stipulated period of 270 days to hammer out a resolution plan was over on January 1 this year. The company did not receive any binding bid that could have led to a successful revival plan barring a few entities expressing interest.
Later, company employees submitted a resolution plan last day, which the committee of creditors could not consider. The employees later argued at the court requesting liquidation order as “a going concern”. They cited improving financial health of the company that reported profits last few months of the last year.