Mumbai: As the Kanpur-based Shri Lakshmi Cotsyn failed to repay about Rs. 4,000 crore loans to a consortium of about 10 lenders by Central Bank of India, the NCLT (National Company Law Tribunal) admitted the insolvency proceedings against the textile manufacturer. The company is into spinning, weaving and finishing of textiles.
V.P. Singh, member judicial and Saroj Rajware, member technical of NCLT’s Allahabad chapter said in their order on June 1st, “There is default in the payment of the financial debt. Therefore, as per section… the present application filed… deserves to be admitted.”
The insolvency application against the textile manufacturer was filed by Union Bank of India this year. The consortium includes Union Bank of India, Bank of Baroda, Indian Bank, Canara Bank and Syndicate Bank. As per the sources, the total amount claimed in the insolvency application is around Rs. 3,500 crore to Rs. 4,000 crore.
The NCLT has appointed Rohit Sehgal as the interim resolution professional (IRP). Rohit Sehgal is a partner at AAA Insolvency Professionals based out in Delhi.
Rohit said, “This is a going concern. It is a challenge for me to bring it back to normal health. The company has been incurring losses for the last few quarters.”
Reportedly, the company incurred losses of Rs. 28 crore for the October-December quarter. This has been a major reason why company has been skipping repayments since 2013. Despite the objections raised by the management, the banks declared Shri Lakshmi Cotsyn as a willful defaulter.
Notably, the company owns five factories across north India – four in Fatehpur and one in Noida. Two other factories are located at Roorkee in Uttarakhand and Sonepat in Haryana as well as company also manufactures military uniforms.
It should be noted that Central Bank of India had approached the Debt Recovery Tribunal to recover the consortium’s loans. The authorized share capital of the corporate debtor company is Rs 50 crore and paid-up share capital is Rs 28.47 crore.