The National Company Law Appellate Tribunal has rejected the settlement offer made by Vallal RCK and upheld the liquidation proceedings of Siva Industries.
Vallal CK, the promoter shareholder behind the lenders’ proposal is likely to approach the Supreme Court against the NCLAT order in a bid to stay the the liquidation proceedings against the company. Not only does the NCLAT order question the commercial wisdom of the creditors, it also reinstates the principle of timely conclusion of liquidation proceedings.
The bone of contention lies in the settlement plan wherein nine financial creditors of the company led by IDBI Bank had agreed to receive a settlement amount of Rs 328.21 as against the total admitted claims of Rs 4,864 crores. Sidelining with the verdict of the NCLT, the appellate tribunal called it a massive haircut against sound judicial principles and stakeholders interest.
Stating that the deadline of 330 days as per the Insolvency and Bankruptcy Code, 2016 is breached, NCLAT approved the liquidation of the company.
The company was sent to bankruptcy court in July 2019 after it could not repay loans to both operational and financial creditors.