Companies

NCLAT upholds liquidation of IVRCL as a going concern

V Rishi Kumar Hyderabad | Updated on June 08, 2020

Headquarters of Hyderabad-based IVRCL   -  Mohammed_Yousuf The Hindu

The National Company Law Appellate Tribunal (NCLAT) has upheld the decision of the National Company Law Tribunal, Hyderabad Branch, ordering liquidation of IVRCL Limited as a going concern.

Given the current stress in the infrastructure sector and the economy, it is to be seen whether there will be interest in acquiring the construction company during the liquidation process. Even at the NCLT stage, there was not much interest for resolution, barring a couple of companies that evinced interest.

The appeal was filed by First Global Finance with IVRCL and State Bank of India as respondents. SBI, as the lead lender, had filed the insolvency case under the Insolvency and Bankruptcy Code, 2016, seeking a resolution plan.

The petitioner filed the appeal stating that the Resolution Plan submitted by it was arbitrarily rejected by the NCLT. Dealing with the petition, in the order, Justice Jarat Kumar Jain, technical members Ashok Kumar Mishra and Balvinder Singh, upheld the order passed by NCLT directing liquidation of the company as a going concern.

Resolution plan

The order observed that the Resolution Plan was rejected by the Committee of Creditors and on account of deviation in expression of interest and non-fulfilment of various other eligibility criteria and the liquidation ordered.

After First Global submitted its updated Resolution Plan in November 2018 along with Phoenix ARC as Financial Sponsor, Phoenix did not want to be categorised as a resolution applicant along with First Global. This required deviation in the EoI and restart of the resolution process.

The Committee of Creditors rejected the proposed deviation of certain terms of condition of the EoI with regard to the Resolution Plan received from the First Global. The Tribunal held that the consortium was not in compliance with the minimum qualification criteria as defined in the terms of EoI.

There was another proposal to reconsider the Resolution Plan with its holding company First Global Stock Broking and Shankar Sharma and Devina Mehra as consortium members.

Following failure to come at a finality to the Resolution Plan and the Committee of Creditors rejecting the bid, NCLT Hyderabad Bench ordered liquidation of IVRCL as a going concern.

The matter was taken up with the NCLAT, which confirmed the NCLT order.

Published on June 08, 2020

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