The Ahmedabad Bench of the National Company Law Tribunal (NCLT) on Friday gave a conditional approval to the ₹5,000-crore bid of Reliance Industries Ltd (RIL) and JM Financial Asset Reconstruction Company Ltd to acquire the distressed Alok Industries Ltd.

The insolvency process against Alok Industries had been initiated in July 2017 on a plea filed by the company’s financial creditor, SBI.

Reading out the operative part of the judgment on Friday, a two-member Bench comprising adjudicating authorities Harihar Prakash Chaturvedi and Manorama Kumari said: “The plan is cleared conditionally as we cannot grant the relief and concessions sought by the resolution applicant. The resolution applicant is free to approach the appropriate authorities who can grant such a relief as per the law.”

Alok Industries was listed as one of the top 12 loan default cases to be taken under the Insolvency and Bankruptcy Code, 2016. However, the approval of the resolution plan comes with a massive haircut for the banks, who have outstanding receivables from the company to the tune of about ₹30,000 crore.

Possible liquidation

In April 2018, following the company failing to meet the 75 per cent threshold in the first round of bidding, Alok Industries faced a possible liquidation. Only 72 per cent of the financial creditors had approved the ₹5,000-crore joint resolution plan of RIL and JM Financial ARC, which is close to the liquidation value of ₹4,000 crore. Alok Industries’ employees union had moved the tribunal, seeking to avoid the company’s liquidation.

However, after the threshold level for approval under the IBC was brought down to 66 per cent of financial creditors, the NCLT allowed a second round of bidding.

With today’s judgment, RIL-JM Financial ACR will acquire Alok Industries including its four facilities located at Silvassa, Vapi, Navi Mumbai and Bhiwandi, which together produce 68,000 tonnes of cotton yarn and 170,000 tonnes of polyester a year.