The joint bid by Reliance and JM Financial rejected for Alok Industries
According to IBC if no resolution plan is approved within the given time period then the assets of the company go into the liquidation
The bid submitted by Reliance Industries Ltd in conjunction with JM Financial Asset Reconstruction Company Limited (JMFARC) has been rejected by committee of creditors (CoC) of Alok Industries. Earlier both the companies had submitted a resolution plan for Alok Industries Limited. The Insolvency and Bankruptcy Code(IBC) requires CoC approval for a resolution plan. JMFARC is a subsidiary of JM Financial Ltd.
Alok Industries Ltd has also informed the BSE that the Corporate Insolvency Resolution Process (CIRP) for the Company expired on April 14, 2018. The company was granted 270 days for the process. However, company got only 1 bid during the said time period which got rejected.
According to IBC, if no resolution plan is approved within the given time period then the assets of the company go into the liquidation. Now as the company is moving to liquidation, banks have to provide for the 100% of the amount of the outstanding dues.
On July 19, 2017, Alok Industries informed the BSE that application for resolution proceedings filed by SBI before the NCLT, Ahmedabad, had been admitted. Alok Industries has reported loss of Rs17,000cr during 9MFY18 due to liquidity issues and underutilisation. The financial creditors have made claim of ~Rs29,740cr, while claim of Rs26,615cr has been admitted by NCLT.
The financial creditors under CIRP includes SBI group (Rs10,445cr claimed under form C), Andhra bank (~Rs779cr), Axis bank (~Rs1,687cr), BOB (~Rs876cr), Bank of India (~Rs776cr), Canara bank (~Rs1,023cr) and many other banks.
Alok Industries Ltd ended at Rs3.84 down by Rs0.2 or 4.95% from its previous closing of Rs4.04 on the BSE. The stock traded above its 200 DMA.