NCLT Admits Insolvency Petition Against World’s Largest Tea Producer

India’s National Company Law Tribunal (NCLT) admitted an insolvency resolution petition against the world’s largest tea producer McLeod Russel India Ltd.

The application filed by the company’s financial creditor IL&FS Infrastructure Debt Fund was admitted by the Kolkata bench of the NCLT on 10 February, McLeod Russel said in a stock exchange announcement.

The financial creditor had filed the petition seeking to initiate a corporate insolvency resolution process (CIRP) against McLeod Russel, claiming a default of 347.47 crore rupees ($42 million) as on 12 November 2019.

IL&FS Infrastructure Debt Fund had subscribed to debentures of McLeod Russel’s two group companies, being Babcock Borsig Ltd. amounting to 150 crore rupees and Williamson Magor & Company Ltd. amounting to 99.5 crore rupees.

McLeod Russel had executed a shortfall undertaking in favor of the financial creditor, thus guaranteeing to discharge the liability and obligations of the borrowers in case of a default. The borrowers failed to comply with their obligations under the debenture trust deeds and McLeod Russel became liable to clear their dues.

The insolvency resolution order against the company, helmed by Chairman & Managing Director Aditya Khaitan, was passed by Judicial Member Rohit Kapoor and Technical Member Balraj Joshi.

IL&FS Infrastructure Debt Fund, a mutual fund scheme acting through its asset management company, was represented by lawyers Ratnanko Banerji, Rishad Medora, Ramya Hariharam, and Asmita Rakhecha.

The NCLT appointed Ritesh Prasad Adatiya as the interim resolution professional (IRP) of the company. The tribunal said the fee payable to the insolvency professional should be compliant with the regulations of the Insolvency & Bankruptcy Board of India (IBBI).

The tribunal also ordered McLeod Russel’s executives to provide all documents in their possession and furnish every details in their knowledge to the IRP within one week from the date of receipt of the order.

The NCLT said the IRP is expected to take full charge of McLeod Russel, its assets and its documents without any delay and should submit the periodical report related to the progress of the CIRP with the tribunal.

McLeod Russel, a part of Williamson Magor Group, began tea planting in India in 1869 and it is the world’s largest tea producer, according to its website. The company, which has over 73,000 employees, produces more than 80 million kilograms of black tea annually.

The Kolkata-based company has 31 tea estates in the Assam Valley and two in the Dooars region of West Bengal, three factories in Vietnam, six estates in Uganda and the management control of the Gisovu estate in Rwanda, Africa.

What Happens When Insolvency Professionals Fail To Discharge Their Duties Efficiently?

This could land insolvency professionals in trouble and draw the ire of the bankruptcy regulator. This happened with Coimbatore-based Rajagurusami Maheswaran, who ignored an e-mail that went to his “spam folder”, intimating about his appointment an IRP of Sandhhya Shipping Services Private Ltd.

If you are a resolution professional, then do keep a tab on the “spam folder” of your e-mail in order to avoid the IBBI’s admonishment and possible penalty.

(Note: $1 = 82.5314 Indian rupees)

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