The proprietors of McLeod Russel India, the country's largest tea producer, have reached an agreement with Techno Electric & Engineering, a financial creditor, clearing the path out of insolvency.
McLeod Russel India chairman and managing director Aditya Khaitan declined to comment. “The matter is closed to our satisfaction,” P.P. Gupta, managing director of Techno Electric & Engineering, said. This is now in the past, and we wish the company continued success.”
McLeod Russel's interim resolution professional (IRP) filed an application with the National Company Law Tribunal (NCLT) under Section 12A of IBC, seeking the removal of the corporate debtor's CIRP, which was heard on Friday. An order has been issued.
"The NCLT has taken the consent terms entered between McLeod Russel and Techno Electric on record in a sealed cover while allowing Techno Electric's application filed under Section 12A through the IRP." This concludes McLeod Russel India's corporate insolvency resolution process,” said Udit Gupta, Techno's counsel.
“The release of McLeod Russel from the clutches of the insolvency resolution process by the order of the NCLT, in its true spirit gazes through the intent of the legislature under Section 12A of the Code read with Regulation 30A of the CIRP Regulations,” said Eshna Kumar, counsel for Aditya Khaitan and former corporate debtor.
“In this case, Techno filed a withdrawal application with the IRP before the CoC was formed. “The order brings an end to a long-running legal battle between two publicly traded companies,” she said.
The IRP's application was based on Techno's request to withdraw its insolvency application, which was admitted by the NCLT on 6 August 2021
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A loan arrangement for Rs. 100 crore inter-corporate deposit (ICD) was the catalyst for Techno's filing of an insolvency petition. The agreement was contingent on the use of the funds for the reimbursement of all loans owed to banks and financial institutions by four estates, as well as the removal of encumbrances placed on the estates. McLeod had also taken out a mortgage on a home.
However, estate title deeds were not given over to Techno, and the loan amount was not repaid before the 31 March 2019 deadline.
According to reports, the settlement entailed an Rs. 100 crore primary loan that Techno and McLeod had agreed to in 2018.
According to industry experts, the settlement between Techno and McLeod is a relief for the industry because Techno is the leading tea producer.
According to sources close to the situation, Gupta has been offered minority ownership in McLeod. As part of the debt resolution being worked out with banks, McLeod's promoters would have to invest in equity. Then Gupta might be able to help.
Under the Reserve Bank of India Circular dated 7 June 2019, Banks had initiated the resolution process. For the purpose of determining and implementing the resolution plan, the majority of the banks had signed inter-creditor agreements. When McLeod was admitted for CIRP, some were in the process of being authorised.
According to insiders, now that the Techno issue has been handled, banks can move on with debt resolution. McLeod owes banks approximately Rs. 1,800 crore, with unpaid interest bringing the total to Rs. 2,300-2,400 crore.
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