Gujarat co deposits Rs 2 cr to join Reid & Taylor resolution process

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SME Times News Bureau | 18 Jan, 2019
Spelling a ray of hope for the beleaguered Reid & Taylor group employees, a Gujarat-based investor CFM Asset Reconstruction Pvt Ltd (CFMARPL) on Thursday deposited an amount of Rs 2 crore as partial Earnest Money Deposit to participate in the resolution process before the NCLT, Mumbai.

However, the National Company Law Tribunal (NCLT) Bench declined CFMARPL CEO S.V. Shah's plea to be permitted as a joint applicant with the Employees' Association and the previous defaulter SPGP Holdings of Hong Kong, and directed him to participate as an independent bidder in the resolution process.

Asking CMFARPL to participate on its own, NCLT Judge B.P. Mohan told Shah that it can be his "internal arrangement" with the Employees' Association, as he is not dependent on investments from SPGP Holdings with which there has been a bad experience.

NCLT Judge V. Nallansenapathy also directed the Resolution Professional (RP) to provide all relevant data to the proposed new investor after he signed the non-disclosure agreement and permitted the CMFARPL a fortnight to "make an honest attempt to complete the due diligence on a war-footing".

Placing the matter for further hearing on January 31, the NCLT ruled: "Parties concerned on behalf of investors, financial creditors and the RP were present. In compliance with the order passed on January 15, 2019 by this bench, Shah (CFMARPL) deposited a DD of Rs 2 crore to show his bona fides.

"Further a deposit of Rs 3 crore at the time of submission of resolution application is required to be submitted by the investor. Shah (CFMARPL) sought four weeks' time to complete the diligence and submit a resolution plan."

It also noted that the SPGP Group had failed to deposit any money to prove its credentials, but if Shah wanted to rely on it (SPGP Holdings) for investments, it would be his personal issue, but as far as the NCLT bench is concerned, he should come on his own.

At the previous hearing on January 15, the CFMARPL had said it has a net worth of over Rs 100 crore besides managing assets of around Rs 1,200 crore.

Incidentally, the Hong Kong-based SPGP Holdings, which had claimed a net worth of Rs 70 crore, was later calculated by the RP to be around Rs 7 crore only.

Last December, the creditors' committee had moved the NCLT for liquidation of the Reid & Taylor as no credible investors were ready to submit a resolution plan for the debt-hit big fashion brand.

However, the Employees' Association, backed by SPGP Holdings, had requested the NCLT for an opportunity to help bail out the company by submitting a resolution plan, but it failed to materialise, paving the way for CFMARPL.