A weaver is seen through threads of Eri silk as he operates a wooden handloom at a mill in Udalgudi, Assam (Photographer: Udit Kulshrestha/Bloomberg)

Lenders To Alok Industries Huddle As Resolution Deadline Ends

Lenders to Alok Industries Ltd will meet on Friday to finalise a resolution plan, as the 270-day deadline set under the Insolvency and Bankruptcy Code (IBC) comes to an end.

According to two people familiar with the case, an emergency meeting of the Committee of Creditors (CoC) has been called by Ajay Joshi - the resolution professional for Alok Industries. The meeting has been called to see whether a plan can be agreed upon before Saturday, when the 270-day deadline ends.

Joshi declined comment on the story.

Lenders had earlier assessed a joint resolution plan submitted by JM Financial Asset Reconstruction Company (ARC) Ltd and Reliance Industries Ltd. However, the CoC did not approve this as lenders insisted on certain conditions being met by the bidders.

As part of the agreement, lenders were seeking claim over nearly Rs 9000 crore worth of receivables on the books of Alok Industries, said the people quoted above. This was in addition to the Rs 5000 crore offer made by the bidders. Alok Industries owes its financial creditors over Rs 29,000 crore, according to information available on the company’s website.

According to the first of the two people quoted above, a senior public sector banker, lenders are willing to offer a management fee of 10-20 percent to the bidders, if they agree to transfer the receivables to the lenders as and when they are realised.

Apart from this, lenders are seeking to invoke guarantees issued by the current promoters of Alok Industries to improve their recovery from this account. They also want the 9.5 percent stake held by the current promoters to be transferred to the lenders.

It is not clear whether these terms and conditions are acceptable to JM Financial-Reliance Industries combine. JM Financial declined to comment on the story. An email sent to Reliance Industries on Friday morning was not immediately answered.

Alok Industries was among the first few cases to be referred to the National Company Law Tribunal (NCLT) after the Reserve Bank of India (RBI) included it in the list of 12 large stressed cases in June 2017. If the 270 deadline is breached, Alok Industries could be sent to liquidation, under the IBC unless the resolution professional secures an extension from the NCLT.