Mumbai: The National Company Law Tribunal (NCLT) Mumbai on Tuesday ordered the liquidation of the debt-hit fashion textile major Reid & Taylor after all attempts to revive it failed. The NCLT Mumbai bench comprising B.M. Mohan and V. Nallasenapathy ruled that the investors have failed to satisfy their networth before the NCLT and hence there are no options left but to order the liquidation of the company, preferably as a going concern.
The ruling came after several investors proposed by the Employees Association and other bidders in the past few months failed to satisfy the basic criteria to take over the sick company, burdened by a default of Rs 4,100 crore. “We call upon the registrar and Resolution Professional (RP) to put in their best efforts to ensure that the company is sold as a going concern,” the NCLT Mumbai Bench said in their oral order this evening.
The bench ruled that it had honest intentions to prevent the company from going into liquidation, protect employees and save the creditors, including public sectors, who had invested public money to get maximum returns. “We are passing the order (of liquidation) because all our efforts to offer opportunity to the investors to revive the company have gone in vain. We are saddened the manner in which investors have misrepresented facts before us. We are, therefore, constrained to give further opportunity to investors to take over R&T,” ruled the NCLT members.
The judges also rebuked a representative of Indian Gas Ltd. New Delhi, the final investor, which staked a claim to take over the company, but later failed to prove the IGL’s networth. Last week, the NCLT Mumbai bench had directed the IGL to appear before the NCLAT, New Delhi in a case filed by Finquest Financial Solutions LTd. (FFSL), the majority stakeholder in R&T.
However, the IGL failed to appear and formally prove its credentials before the NCLAT, which ordered the NCLT Mumbai to dispose of the matter within two weeks and placed the matter for final hearing on February 27 (in New Delhi). “We will not hear you today. Who are you? You are only an employee and we have given you an opportunity to prove your company’s networth, but you failed,” the NCLT Mumbai bench said sharply today. The NCLT also rejected Scorpio Vintrade to invest jointly with IGL as it was not a group company of the latter today.
Earlier, other investors SPGP Group of Hong Kong, CFM Asset Reconstruction Pvt. Ltd, had staked their claims but later withdrew from the fray. Edelweiss ARC, one of the financial creditors had initiated the NCLT proceedings under Corporate Insolvency Resolution Process, to recover the monies defaulted by R&T. Officials in the FFSL said the fate of around 1,100 employees of the Mysore-based company would be clear now that the NCLT Mumbai’s final verdict has been delivered.
Promoted by S. Kumars-fame textile tycoon, Nitin S. Kasliwal, Reid & Taylor once boasted of top-notch brand ambassadors such as Hollywood’s Pierce Brosnan and Bollywood’s Amitabh Bachchan. Since 1999, the company operates a modern plant and machinery in Mysore from where it produced its famous men’s apparels ranging from formal to casuals, but after the financial crisis hit a few years ago, it continued with truncated operations.