Edelweiss Asset Reconstruction Company Ltd. Vs Bharati Defence and Infrastructure Ltd. [CP 292/I&B/NCLT/MAH/2017] - Synopsis
Team SoOLEGAL 16 Dec 2020

In this case, Edelweiss Asset Reconstruction Company Ltd. Vs Bharati Defence and Infrastructure Ltd. [CP 292/I&B/NCLT/MAH/2017], the National Company Law Tribunal (NCLT) ordered the liquidation of Bharati Defence & Infrastructure Ltd, the respondent company in this case, and had refused the resolution proposal of Edelweiss Asset Restoration Co. Ltd the appellant in this case. In its order, the Mumbai Bank of NCLT was of the view that the appellant had not issued a realistic and feasible strategy to handle the affairs of Bharati Defence. In the order, Rs 9 Crore was proposed to pay by the appellant’s resolution plan against the dues of Rs 187 crore against the Operational Creditor. They would also be charged in a staggered way, and the new management would settle on the sum and length of payment of settling dues for each operating creditor. In addition, Edelweiss proposed to pay 1,124 crore in a staggered fashion to the financial creditors to whom it owes 11,373.4 crore, indicating a 90 per cent discount. The appellant company, who had received loans from lenders from Bharati Defence, now retains 83% of the voting rights in its creditors' committee. In 2017, the Asset Reconstruction Company had referred Bharati to the bankruptcy court. Approximately 95 percent of the lenders approved the Edelweiss resolution strategy. The Bench was of the view that Edelweiss' scheme suggests that 35 crore be used as the costs of insolvency proceedings before repaying other debts. The Bench also expressed its concern about the huge fee paid by the Resolution Professional and its team of few individuals, even though the organisation has a large workforce. The Bench was also of the view that the monthly fee paid by Resolution Professional and its team is approximately 80 lakh, while the monthly fee of approximately 850 employees is 1.5 crore, which is indicating a high fee for Resolution Professional and its team. The Bench had considered the national significance attached to the product line of the company, to the consumers specifically to the Ministry of Defense, to the Indian Coast Guard, to customs, etc. The Bench had ordered the liquidator to try to sell the corporate debtor business as a going concern.

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