The Mumbai bench of NCLT Tuesday ordered liquidation of the bankrupt Reid & Taylor following the later bidder's failure to meet eligibility criteria, but asked the RP to ensure that the once famous brand is sold as a going concern and protect the interest of the workers. However, the recently Reid & Taylor Employees Association has decided to challenge the liquidation order at the appellate tribunal NCALT. The association had moved the bench on January 4 with a bid when it was an unregistered union, and thus stalled the liquidation bid the lenders and the RP wanted.
"We feel the order to dismiss the expression of interest presented by India Gas, which was fronting our bid-- was manipulated by Finquest Financial--the largest creditor to the company--and we have decided to challenge the same at the NCALT by Friday," association spokesman Vivek Pandit told PTI over phone late in the evening. The move came after the representatives of India Gas failed to satisfy the mandatory networth of Rs 50 crore and other bona fides, even though it was ready to make the Rs 2- crore non-refundable earnest money deposit.
The Nitin Kasliwal-run company owed over Rs 4,100 crore to the lenders led by Finquest Financial Solutions which had lent it Rs 775 crore. The company was taken to the NCLT in March 2018 by Edelweiss ARC on behalf of Exim Bank and now owns 23 percent of the secured loans, following a Rs 66-crore default. A similar liquidation petition was filed by Finquest Financial Solutions, seeking repayment of Rs 775 crore.
Other secured creditors include Bank of India (15 percent), PNB (12 percent), IDBI Bank (6 percent), and JM Financial (5 percent), among others. While dismissing the bid by the Delhi-based India Gas today, a bench of Bhaskara Pantula Mohan and V Nallasenapathy, said the representative of the bidder was also unable to prove its bona fide at the National Company Law Appellate Tribunal.
The bench admitted that even as it is ordering liquidation, an investor from the US, Phoenix GBL, made an offer to take over the company "but going by the past experience of four-five failed bids, we don't want to waste any more time." Earlier the RP had received many expressions of interest by none of the moved towards fruition. The bidders included the Hong Kong-based SP Growth Partners, CFM Asset Reconstruction Company and an unnamed British firm. In the initial stage, the lenders got expressions of interest from Arcil, Invest ARC, Kotak Bank-promoted Phoenix ARC, Suraksha ARC and ACRE ARC that's backed by SSG Capital of Singapore. That apart, foreign funds like Eight Capital and Carlyle had also submitted expressions of interest.
"All our efforts have gone in vain and we are saddened with the manner in which the industry misrepresented the matter, giving us no confidence to further afford an opportunity for anybody," the bench said ordering liquidation. The bench further asked creditors and the resolution professional to ensure that "the company is sold as a going concern so that the workers interest is protected." Reid & Taylor was promoted by the Kasliwal family-run S Kumar Group, which is also facing bankruptcy proceedings, owes over Rs 4,100 crore to banks and other lenders.
The lenders had on December 14, 2018 decided to go in for liquidation as no resolution plan was submitted even though it got eight expressions of interest. On January 7, 2019 the RP, Venkatesan Sankaranarayan of EY had filed an application with NCLT after a special audit by KPMG had found that promoter Kasliwal had carried out fraudulent transactions worth Rs 1810.11 crore by undervaluing many inter- and intra-company purchases and an additional write-off of Rs 1,713.88 crore without any evidence, under Section 66 (1) of the bankruptcy law.
The total fraudulent transaction is pegged at Rs 3,523.99 crore, the RP had said. Later Kasliwal unsuccessfully moved NCLT to get a copy of the audit report. "A transaction review by KPMG, submitted on December 17, 2018, based on the financial statements from October 1, 2014 to April 6, 2018, has found reduction of asset base to the tune of Rs 1,810.11 crore by showing fictitious sale and purchase in its books, to establish inflated sale and purchase activity without any movement of actual goods," the RP said in his application.
In its hey days, Reid & Taylor used to sell premium suits, jackets, trousers, shirts, T-shirts, among others and was endorsed by James Bond actor Pierce Brosnan and Hindi actor Amitabh Bachhan. The company has around 1,200 employees and has a plant in Mysuru, which is running at only under 30 percent of its installed capacity now and thus incurring cash losses.
Reid & Taylor's parent S Kumar Nationwide too is facing bankruptcy. While IDBI Bank has initiated insolvency proceedings against S Kumar Nationwide which owes over Rs 7,570 crore to lenders, Edelweiss ARC referred Reid & Taylor to the insolvency court. Kasliwal, declared a willful defaulter by most lenders and thus is not be eligible to participate in the resolution plan. He has since then reportedly moved into London. In 2008, GIC of Singapore invested Rs 900 crore for a 25.4 percent stake, valuing the brand at Rs 3,540 crore..