NCLT admits tea producer McLeod Russel for bankruptcy proceedings – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/banking/finance/banking/nclt-admits-tea-producer-mcleod-russel-for-bankruptcy-proceedings/articleshow/85121116.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23Synopsis

The bankruptcy proceedings were initiated by construction company Techno Electric and Engineering Company in 2019 over a default on interest payments towards a Rs 100-crore loan, according to a court order reviewed by ET.

The National Company Law Tribunal (NCLT) has admitted bankruptcy proceedings against tea producerMcLeod RusselNSE 3.99 %, promoted by the Khaitan family ofWilliamson MagorNSE 4.67 % group.

The bankruptcy proceedings were initiated by construction company Techno Electric and Engineering Company in 2019 over a default on interest payments towards a Rs 100-crore loan, according to a court order reviewed by ET.

Techno Electric had approached NLCT claiming that McLeod Russel did not repay a loan it had advanced through an inter-corporate deposit which carried an interest rate of 14% per annum.

The loan which was granted on the condition that the tea producer would repay banks with the money and release four tea estates that were mortgaged toICICI BankNSE -0.68 %, it claimed. The title deeds of the four tea estates were to be transferred toTechno Electricand McLeod Russel had failed to doso, it said.

NCLT has appointed Kanchan Dutta as the interim resolution professional – the official charged with managing the affairs of a company once it is admitted for bankruptcy – of McLeod Russel.

The bankruptcy admission comes as a setback to the promoters who have been negotiating with an ICICI Bank-led consortium to settle the company’s dues. he Kolkata-based tea producer owes banks around Rs 4,000 crore including interest.

Among other lenders that have outstanding dues against the company are Allahabad Bank, UCO Bank, Axis Bank and Yes Bank.The promoters led by Aditya Khaitan had proposed a resolution plan to the lenders, as ET reported on April 8. It is not immediately clear if the plan has been rejected.

Typically, once a bankruptcy application made by a creditor is admitted by the NCLT, other creditors of the company also admit their claims against the company and a committee of creditors is convened.McLeod Russel had posted a net profit of ?12 crore on sales of ?950 crore in FY20. It was once ranked amongst the largest tea producers in the world and owned 45 tea estates. It employees 60,000 workers.

Williamson Magor group also owns battery maker Eveready and engineering companyMcNally BharatNSE -1.44 %.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s