The National Company Law Tribunal (NCLT) on Friday gave its approval to start insolvency proceedings against debt-laden tea maker McLeod Russel, promoted by the Khaitan family of Williamson Magor group. Tea grower McLeod Russel is facing a National Company Law Tribunal order on its bankruptcy proceedings after a financial creditor moved an application against the company claiming it has defaulted on dues owed to it. The application filed by Techno Electric and Engineering Co has been heard by NCLT, which has reserved its orders after taking into account arguments made by McLeod Russel’s lawyers. The bankruptcy admission comes as a setback to the promoters who have been negotiating with an ICICI Bank-led consortium to settle the company’s dues. The Kolkata-based tea producer owes banks around Rs 4,000 crore including interest.
In a stock exchange filing on Friday, the company said the NCLT’s New Delhi bench, vide its order dated 6 August 2021 admitted the insolvency application filed by Techno Electric & Engineering, a financial creditor, under Section 7 of the Insolvency and Bankruptcy Code (IBC). The financial creditor had filed the application before the Kolkata bench after the company defaulted on repayments of term loans of Rs 100 crore and interest thereon. Once a bankruptcy application made by a creditor is admitted by the NCLT, other creditors of the company also admit their claims against the company and a Committee of Creditors (CoC) is convened. McLeod Russel had posted a net profit of 12 crore on sales of 950 crore in FY20. It was once ranked amongst the largest tea producers in the world and owned 45 tea estates. It employees 60,000 workers. Williamson Magor group also owns battery maker Eveready and engineering company McNally Bharat.
Later, the matter was transferred to the New Delhi bench. Under the provision of IBC, the bench appointed Kanchan Dutta as the Interim Resolution Professional (IRP) for McLeod. Meanwhile, the stake of the Khaitan family in the company had slumped to 10 per cent due to offloading of shares of pledged shares with lenders.
Among other lenders that have outstanding dues against the company are Allahabad Bank, UCO Bank, Axis Bank and Yes Bank. In 2019, Yes Bank had moved the NCLT against the company alleging a loan default Rs. 500 crore.