Alok Industries' Insolvency Professional Seeks Fresh Bids To Attract More Players

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Alok Industries' Insolvency Professional Seeks Fresh Bids To Attract More Players

The insolvency professional supervising the Alok Industries bankruptcy process has called for fresh bids to resolve the Rs 29,000-crore default in the hope of attracting more bidders for the textile company, said two people with knowledge of the matter.

“Alok was the only company among the 12 listed by Reserve Bank of India (RBI) to be referred to bankruptcy that did not receive any bids when the insolvency professional invited expressions of interest,” said one of the two.

“Therefore, it was decided to go for a fresh round of bidding for the company.” The last date for expression of interest submissions had been October 12.

It was reported in November, after the deadline was over, that Reliance Industries was interested in participating in the process. Last week, it was reported that a group of Alok Industries employees wanted to take part.

Recently, resolution professional Ajay Joshi invited “interested applicants including those who have not submitted an EoI before to now submit a resolution plan as per the Insolvency and Bankruptcy Code.”

Applicants have to submit an Expression of Interest (EoI) to participate in the resolution plan. Only they will have access to the financial and technical data room, which is key to submitting a binding bid.

“Considering these factors, it was decided to go for a fresh EoI round so that Reliance Industries, employees and new investors can participate in the resolution plan,” said a bank official. No deadline has been indicated.

The company faces claims to the tune of Rs 29,519 crore from financial creditors and Rs 624 crore from operational creditors. While inviting EoIs, the resolution professional has said that only those companies with a net worth of Rs 500 crore and Rs 3,000 crore of assets under management will be eligible to participate. A participant should also have the ability to invest Rs 500 crore as equity capital in the company.

Alok Industries is a fully integrated textile unit with four core divisions — cotton yarn, apparel fabric, home textile and polyester yarn. Reliance Industries is interested mainly in the polyester yarn unit.

Lenders had attempted to revive the company through a strategic debt restructuring (SDR) scheme. This allows them to convert part of their debt into equity and sell it to a new promoter. This got stuck following an order by the Bombay High Court that stayed the sale of assets and a change in the company's equity structure.

The court issued the order following a petition filed by HSBC on behalf of a few unsecured lenders to settle dues amounting to US$ 55 million. The account was classified as non-performing in the books of the bank by November 2016. The company posted a loss of Rs 3,502 crore on revenue of Rs 8,326 crore in the year ended March 2017.