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The National Company Law Tribunal, New Delhi, has stayed the liquidation process of Nizam Deccan Sugar Factory ordered by the NCLT, Hyderabad, in June.
On a petition moved on behalf of the Telangana government, the NCLAT has directed the Official Liquidator, appointed by the NCLT, not to alienate the properties of Nizam Sugars (Corporaate Debtor) and not to create any encumbrance on the properties. The NCLT had appointed R Ramakrishna Gupta, as the liquidator.
Typically, when a company is liquidated after failure to find a revival plan and a suitor, its assets are sold through a liquidation process, which could be in bits and pieces.
In its order, the NCLT, Hyderabad, ordered the liquidation of Nizam Sugars under the provisions of the Insolvency and Bankruptcy Code, 2016.
The petitioner, which had earlier evinced interest in working towards a revival plan, submitted that the entire insolvency resolution process was conducted in contravention of the provisions of the Code.
The petition also alleged fraud in the way the company was taken towards liquidation instead of resolution and charged that the Resolution Professional, along with the private management of Nizam Sugars, tried to scuttle the revival of one of the biggest sugar factories in the country, which had fallen into bad times.
During the insolvency process at the NCLT, Hyderabad, the Committee of Creditors held 11 meetings, during the course of which a couple of potential suitors expressed interest.
However, the Resolution Professional approached the Industries and Commerce Department of Telangana with a request to consider the Government Order issued in 2015, wherein the State government had decided to annul the joint venture agreements with the private firm and manage the factory in a cooperative sector.
Now with this move and stay on the liquidation process, it is to be seen if the Telangana government will get to steer its destiny. The Telangana Rashtra Samithi leadership, during the 2014 election campaign, had promised to revive the sugar factory, a major asset in Telangana. The liquidation process was announced by the NCLT during the recent general elections.
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