NCLT initiates insolvency proceeding against MEP Infrastructure Developers

The National Company Law Tribunal has initiated the corporate insolvency resolution process (CIRP) against MEP Infrastructure Developers Ltd on a plea filed by Bank of India and appointed an interim resolution professional to take control of the company.

The Mumbai bench of the NCLT admitted the plea under the IBC filed by the public sector lender, claiming a default of Rs 127.86 crore.

"The factum of the existence of financial debt and its default stands proven on record. It has also been established that the petition is within time. Considering the facts placed before us and the fact that the Corporate Debtor owes the Financial Debt in excess of Rs 1 crore, which is in default.

"This bench is of the view that in such circumstances, it is imperative that the CIRP be initiated in the matter of the Corporate Debtor (MEP Infrastructure)," said a two-member NCLT bench in its 9-page order passed on March 28, 2024.

The NCLT order further said there would be a moratorium under section 14 of the Insolvency and Bankruptcy Code (IBC), protecting the company from any suits, decree and transferring, encumbrance of realty company MEP Infrastructure.

MEP Infra availed certain financial assistance from Bank of India under Multiple Banking Arrangements (MBA) led by IDBI Bank in March 2010.

Initially, Bank of India as a member of the MBA sanctioned a non-fund based credit limit of Rs 150 crore in March 2010 and later enhanced to Rs 175 crore.

A recall notice was issued on October 4, 2022, for the entire credit facilities sanctioned to MEP Infrastructure.

It showed interest in settling dues out of the court and approached the financial creditor with the proposal.

However, the financial creditor did not consider the proposal as it involved a huge haircut and also there was no clarity on the source of funds. Thereafter, the financial creditor filed a plea to initiate insolvency before the NCLT.

The NCLT admitted the plea and appointed an IRP.