Debt

Debt financing

NCLAT dismisses Sivasankaran's appeal against NCLT order on liquidation of Siva Industries

Business Standard  

The liquidation proceedings of Siva Industries and Holdings, a Chennai-based firm, is all set to land in the Supreme Court after the National Company Law Appellate Tribunal (NCLAT) rejected a settlement offer made by one of the shareholders, Vallal RCK. In its order, the NCLAT said as the mandatory deadline of 330 days as per the Insolvency and Bankruptcy Code, 2016 is breached, the liquidation of the company can go ahead. Earlier, nine financial creditors of the company led by IDBI Bank had agreed to receive a settlement amount of INR 328.21 crore from Vallal, as against the total admitted claims of INR 4,864 crore – which amounted to a 93% haircut for the lenders. This settlement proposal, however, was rejected by the National Company Law Tribunal, Chennai in August last year which slammed the lenders for the huge haircut saying it would rather go by its “judicial wisdom” rather than approving the “commercial wisdom” of the CoC and sent the company for liquidation. The NCLT had said the application made by RCK Vallal, father of founder of Siva group, C Sivasankaran, is not conforming to the Section 12A of the Insolvency and Bankruptcy Code. The Section 12A of the IBC gives an opportunity to the promoters to get back their companies if 90% of the lenders agree and the promoters' clear their past dues.