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    Lenders told to consider new Finquest's plan for Ballarpur

    Synopsis

    The NCLT on January 25 had ordered liquidation after the company's committee of creditors (CoC) rejected an earlier Rs 590-crore offer from Finquest. After this, Finquest submitted an improved resolution plan and appealed to the National Company Law Appellate Tribunal to direct the lenders to consider this offer.

    NCLTGetty Images
    The appellate bankruptcy tribunal this week overturned a liquidation order passed by the Mumbai bench of the National Company Law Tribunal (NCLT) against Avantha group-promoted Ballarpur Industries, and directed its creditors to consider an improved resolution plan submitted by Finquest Financial Solutions.

    The NCLT on January 25 had ordered liquidation after the company's committee of creditors (CoC) rejected an earlier Rs 590-crore offer from Finquest. After this, Finquest submitted an improved resolution plan and appealed to the National Company Law Appellate Tribunal to direct the lenders to consider this offer.

    While the initial offer also included an extra payment from the proceeds of the sale of Ballarpur Industries' land at Choudwar in Odisha as and when it is sold, under the revised plan, Finquest has assured to pay Rs 100 crore more to the lenders without waiting for the land sale to happen, said a person aware of the plan.

    claims

    The appellate tribunal passed an order on March 7 staying the liquidation and directing the CoC to consider the new plan within six weeks. The revised plan will be discussed by the CoC on March 14.

    The initial Rs 590-crore plan by Finquest, promoted by equity investor Bharat Patel, included Rs 55 crore of working capital loans, payments of Rs 474 crore to lenders and Rs 9 crore each to trade creditors and employees, and the balance Rs 43 crore towards insolvency process cost, the person said.

    Of the Rs 474 crore allocated to lenders, Rs 110 crore was to be paid upfront, Rs 311 crore in the form of a bullet payment at the end of three years and Rs 53 crore as cumulative redeemable preference shares.

    "The company has yet to submit a revised payment plan on how it would pay the additional Rs 100 crore," the person said. Ballarpur Industries' resolution professional, Anuj Jain, declined to comment. Finquest did not respond to ET's request for comment.

    Ballarpur Industries had admitted Rs 3,175 crore of claims from 19 financial creditors, with IDBI Bank's being the highest at Rs 850 crore. Finquest is also one of the lenders with an admitted claim of Rs 175 crore, which gives it 5.5% of the voting rights in the CoC. Ballarpur Industries is one of the rare cases where the lenders include some high-profile foreign and private sector lenders, such as DSB Bank, Deutsche Bank, HSBC, Citi Bank, HDFC Bank, Axis Bank, IndusInd Bank, Kotak Mahindra Bank and Federal Bank.

    Avantha Promoter Gautam Thapar was arrested last August over alleged money laundering linked to the default of a Rs 515 crore loan taken by a group company from Yes Bank.


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