An employees’ trust of debt-ridden Alok Industries has dashed off letters to the chairmen of nearly 10 banks asking them to reconsider their decision to reject a resolution plan submitted by a consortium led by Reliance Industries.
The trust is of the opinion that the resolution plan will ensure the livelihood of about 18,000 employees, while the lenders will receive “much more” from the process.
Nearly 30 per cent of the total lenders had rejected the resolution plan submitted by a consortium led by Reliance Industries Ltd (RIL). Subsequently, the Resolution Professional (RP) has referred the company for liquidation. The trust had earlier moved an interlocutory petition against the liquidation.
“On behalf of all employees, we would be extremely grateful if your bank could kindly provide its approval of the resolution plan in writing to the RP to enable him to process the matter further with NCLT,” the letter, dated April 27, written by the Alok Employees Benefit and Welfare Trust said.
“This would ensure that the livelihood of thousands of families is protected and also the lenders receive the settlement amount in excess of liquidation value upfront…,” the letter, a copy of which was reviewed by BusinessLine , added. The National Company Law Tribunal’s (NCLT) Ahmedabad Bench will hear both the liquidation and trust’s petitions on Wednesday (May 2).
The letter was addressed to chairmen of Central Bank of India, Dena Bank, IDBI Bank and United Bank of India, among others. When contacted, a trust official confirmed the development, but declined to divulge further details.
Silvassa-based textile manufacturer Alok Industries was among the 12 first large non-performing assets identified by the Reserve Bank of India for resolution under the Insolvency and Bankruptcy Code (IBC) in June 2017.
“….we understand that the resolution plan offered to the lenders a cash settlement of ₹5,050 crore, which is well above the liquidation value of ₹4,200 crore. This payment was to be made upfront and be available for the lenders for immediate deployment in further lending,” it said.
The letter states that Alok currently employs 18,000 personnel (which at the peak was 30,000), generates revenue of ₹35,000 crore and supports 3,500 vendors.
“Therefore, if Alok is forced into liquidation, it will have a cascading effect…,” the letter said, adding that more than 70 per cent of the lenders, including lead bank SBI, which has the largest exposure, have concluded that resolution is a preferred outcome over liquidation.
Earlier, on April 15, RIL said its resolution plan for Alok – jointly with JM Financial Asset Reconstruction Company – was rejected by the Committee of Creditors.