Employees use sewing machines on a production line (Photographer: Dhiraj Singh/Bloomberg)

Lenders Clear RIL-JM Financial’s Fresh Bid For Alok Industries

The committee of creditors for Alok Industries Ltd. has approved a joint resolution plan submitted by Reliance Industries Ltd. and JM Financial Asset Reconstruction Co. Ltd., according to two people in the know of the matter.

The resolution plan is valued at close to Rs 5,000 crore, in which Rs 4,000 crore would be used to repay financial creditors. As per the claims admitted by the resolution professional in the case, financial creditors have submitted claims worth over Rs 29,000 crore.

Seventy-two percent of creditors by value of loans voted in favour of the resolution plan, the two people quoted above told BloomberQuint requesting anonymity. After a recent amendment to the Insolvency & Bankruptcy Code, 66 percent of creditors by value now need to approve a resolution plan for it to go through, as against 75 percent earlier.

Alok Industries is one of the 12 large companies to have been sent to the National Company Law Tribunal for insolvency proceedings after the Reserve Bank of India shortlisted them in June 2017. These companies together accounted for Rs 2.77 lakh crore worth of bad loans in the banking system.

This was the second round of voting on the plan for the textile company, after the Ahmedabad bench of the NCLT directed the creditors to do so. In the previous round of voting, only around 70 percent of the creditors voted in favour of the RIL-JM Financial ARC plan. Since there was no resolution plan approved at the end of the 270 day period mentioned under the IBC, the resolution professional filed for liquidation.

However, the tribunal in its order last week pointed at the amendment to the IBC, which asked for a lower threshold on the voting. It asked the lenders to vote again, keeping in mind the new regulations.

The NCLT bench was also hearing a plea by the employees’ association of Alok Industries, which was against liquidation of the company.

The next hearing on the matter is scheduled for June 26.

Also read: Alok Industries: Debt-Driven Dream Run Meets With A Bad End