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In a first for a bankruptcy firm, nearly 200 employees of debt-ridden RTIL — formerly Reid & Taylor (India) — have formed an association to scout for potential investors and revive the company. More importantly, the move is to prevent liquidation of the firm, with no major investors evincing interest.
Further, the employees who are based out of the company’s Mysuru facility will move the National Company Law Tribunal’s (NCLT) Mumbai bench seeking to add the association as “co-applicants” in the suit. The body, an Association of Persons (AOP), will file its plea before the NCLT on January 1 (Tuesday).
“We have been hearing that there are no takers for the resolution plan and the company might be heading for liquidation. Our intention is to prevent this as liquidation will result in job losses and this association has been formed to revive the company by taking part in the resolution plan,” MS Prasanna, General Secretary of the RTIL Ltd Employees’ Association, told BusinessLine.
Bringing in investors
Further, the AOP (according to the Income Tax Act, 1961, it is an integration of two or more persons for a common purpose) is also promising to bring in investors.
“Already two investors have evinced interest in investing in RTIL, with one of them agreeing to submit a detailed resolution plan, including the investments they intend to make with the AOP soon,” he said, but did not disclose their names, citing confidentiality clauses.
The investors need to go through the documents before they can submit a final bid, he added.
The association would also interact with the management, apart from sorting out issues relating to the staff members.
RTIL, a vertically-integrated premium clothing provider that sells under the international brand ‘Reid & Taylor’ in India, is struggling to pay off its ₹3,800-crore debt.
It still runs a factory with about 30-40 per cent production capacity in Mysuru, and employs about 1,200 personnel and another 200-250 contract labourers. It also has about 1,000-1,500 dealers across the country.
In June 2018, the Interim Resolution Professional of RTIL called for an Expression of Interest from prospective lenders seeking a resolution plan in accordance with the provisions of the Insolvency and Bankruptcy Code (IBC).
The basic criteria to submit a resolution plan is a minimum consolidated net worth of ₹50 crore at group level as of March 31, 2017.
A couple of investors were initially interested, but they are believed to have backed out.
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