Alok Industries' employees move NCLT as liquidation threatens 12,000 jobs
20 April 2018
The employees trust of bankrupt Alok Industries has moved an application objecting to the liquidation of distressed firm after lenders rejected a bankruptcy resolution proposal that involved a substantial haircut.
Alok Industry is India's largest fully integrated textile company with a dominant presence in the cotton and polyester segments.
About 12,000 permanent employees of the company are set to lose jobs if Alok Industries moves to liquidation, in what could be the biggest labour casualty since the implementation of the bankruptcy code.
Plans to revive the distressed firm failed as lenders were unwilling to accept an offer that involved a substantial haircut.
The NCLT has listed the matter for 11 May, according to a stock exchange filing by Alok Industries.
The insolvency proceedings are also expected to impact hundreds of small vendors and service providers to the company. Almost 2,05,000 equity shareholders, including public financial institutions and retail investors, are also expected to lose their investments as the company heads to liquidation.
A consortium of lenders, led by the State Bank of India (SBI), is claiming dues of over Rs23,000 crore from Alok Industries. Against this, a consortium of Reliance Industries and JM Financial offered to pay Rs5,050 crore in a revised all-cash offer. Only 70 per cent of the lenders endorsed the revised all-cash offer, which was just about Rs100 crore higher than the previous proposal.
At least 75 per cent of the lenders have to agree for a resolution proposal to be approved.
The Ahmedabad bench of the NCLT admitted insolvency proceedings against the textile firm last July.
Plans to revive the distressed firm failed as the 270-day deadline before which lenders had to finalise a resolution plan ended on 14 April.
India’s biggest textile firm with a total staff strength around 18,000 is now staring at liquidation.
Besides Alok Industries, ABG Shipyard and Lanco Infratech are among the 12 first large non-performing assets (NPAs) identified by the Reserve Bank of India (RBI) for resolution under the Insolvency and Bankruptcy Code (IBC), 2016.