Questioning the rejection of a resolution plan by some banks, the Alok Employees Benefit and Welfare Trust (AEBWT), representing 18,000 workmen and employees of Alok Industries Ltd, has demanded the intervention of the RBI.
In a statement here on Friday, the AEBWT urged the RBI to ask the dissenting banks to re-evaluate their decision to reject the ₹5,050-crore resolution plan put forward by Reliance Industries Ltd (RIL) and JM Financial, and seek an explanation for the “irrational” decision of choosing liquidation over resolution.
The trust asked the RBI to direct the banks to take a “balanced view”, keeping in mind both commercial and socioeconomic factors.
Last month, RIL had said its resolution plan to acquire Alok Industries in conjunction with JM Financial Asset Reconstruction Company had been rejected by the Committee of Creditors (CoC).
Alok Industries, an integrated textile manufacturing company operating mainly in the cotton and polyester segments, was admitted for the corporate insolvency resolution process by the NCLT in July last year under the Insolvency and Bankruptcy Code (IBC), 2016.
The insolvency resolution professional (IRP) had received only one eligible bid, submitted by the RIL-JM combine.
However, though the bid value was 20 per cent higher than the liquidation valuation of ₹4,200 crore, it fell short of approval, with 29.43 per cent of lenders voting against it.
Ideal candidate
Expressing shock over the rejection, the AEWBT said while the plan received strong support from the majority of the lenders, with over 70 per cent affirmative votes (including from the lead bank, SBI), the plan was rejected as it fell short of the 75 per cent vote mandated by the IBC.
The AEWBT pointed out that Alok Ind is an ideal candidate for the resolution process, as it is an operating, self-sustaining entity requiring only correction of capital structure and infusion of funds for working capital purposes.
The trust said it defies logic that the CoC, despite SBI approving the plan, rejected an upfront cash payment higher than the liquidation value at a time when NPA levels are proving to be a real challenge.
The Ahmedabad bench of NCLT will be hearing the IRP’s suggestion for liquidation on June 11, where AEBWT has also filed its interlocutory application.