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Khaitans reach settlement with IL&FS to regain control of McLeod Russel

Once NCLT approves application, tea producer would be out of insolvency proceedings

IL&FS
Ishita Ayan Dutt Kolkata
3 min read Last Updated : May 09 2023 | 7:15 PM IST
The promoters of McLeod Russel India, the country’s largest bulk tea producer and part of the Brij Mohan Khaitan group, have reached an out-of-court settlement with IL&FS Infrastructure Debt Fund, multiple sources said.

An application for withdrawal from the corporate insolvency resolution process (CIRP) has been filed with the Kolkata bench of the National Company Law Tribunal by the interim resolution professional (IRP). Once NCLT approves the application, McLeod would be out of insolvency proceedings.

Ritesh Prakash Adatiya, the IRP, said an application for withdrawal from CIRP under Section 12A of the Insolvency and Bankruptcy Code (IBC) was filed on May 6.

“The application has been filed on instruction from IL&FS Infrastructure Debt Fund, the applicant for CIRP against McLeod Russel. I filed the application after receiving Form FA from IL&FS,” he said. Form FA is an application for withdrawal of CIRP.

Sources close to the Khaitans said the application is under process. An IL&FS group spokesperson did not want to comment as the matter was sub judice.

Sources said the terms of settlement involved payment of an amount and land, translating into a significant recovery for the financial creditor.

The appeal against CIRP, filed by Aditya Khaitan with the National Company Law Appellate Tribunal (NCLAT), was listed for hearing on Tuesday. However, sources said that the matter was adjourned to Friday.

Khaitan appealed against the NCLT Kolkata Bench order admitting an application filed by IL&FS Infrastructure Debt Fund under Section 7 of the IBC for initiating CIRP against McLeod Russel. IL&FS had sought to initiate CIRP against McLeod Russel in connection with a default in payment in 2019. The amount as on November 12, 2019 was Rs 347.47 crore, of which the principal amount was about Rs 252.66 crore.

McLeod sources said that once out of insolvency, the company would talk with banks for debt restructuring. The CIRP was initiated at a time when McLeod had entered into “exclusive” talks with Carbon Resources for a one-time settlement of its debt to lenders. McLeod's bank debt is understood to be in the range of Rs 1,600 crore.

The exclusivity agreement entered in January was for a period of 60 days. But sources indicated that it was likely to be revived.

However, even as McLeod settles with IL&FS, it would also have to deal with other lenders—KKR and Aditya Birla Finance—at the holding company level.

This is not McLeod’s first brush with CIRP. In August 2021, the NCLT, New Delhi bench, had admitted an application by Techno Electric & Engineering Company under Section 7 of the IBC. The application was withdrawn after a settlement. 


Topics :KhaitansIL&FS case

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