The debt resolution of Tecpro Systems that owes about Rs 7,000 crore to banks could run into trouble, with the official appointed by the bankruptcy court to handle the process filing a case accusing the promoters of siphoning off of funds.
The second highest bidder for the company, US-based Eight Capital, is also planning to raise its objections for violation of section 29A of the Insolvency and Bankruptcy Code (IBC) by the winning bidder, Kridhan Projects, people close to the Kridhan Projects, people close to the development said. The section restricts promoters of stressed companies from bidding for other such assets. Eight Capital did not want to comment, while Tecpro didn’t respond to a request for comment until press time Sunday.
In his complaint filed in the Delhi bench of the National Company Law Tribunal, Venkatesan Sankaranarayanan, the resolution professional for the Delhi-based company that manufactures material handling equipment, said: “Transactions ere entered into and carried out with design to cancel them to defraud creditors.”
ET has seen a copy of his complaint.
Tecpro was referred for corporate debt restructuring in March 2014 during which a special investigation audit highlighted the possibility of diversion of funds. The charges were refuted by Tecpro promoters then and subsequently several of the lenders sold their loans to the company to Edelweiss Asset Reconstruction Company (EARC). Proceedings against the company under IBC started in August 2017.
EARC had engaged EY to investigate the books of the company. The allegations made by the resolution professional now are based on EY’s report. “Invoices and delivery challans were forged and no steel was ever delivered under the respective invoices,” the application filed in the NCLT said.
While the tribunal has directed the company to file its response against these allegations, Eight Capital has also raised its objection in the NCLT to the decision of the committee of creditors to declare Kridhan Projects the winning bidder. Kridhan Project’s offer to pay Rs 50 crore upfront and transfer of Rs 400 crore debt, to be paid in three years, got 86% votes at the CoC. Of these, 85% votes belonged to EARC.
Only two out of six lenders voted in favour of Kridhan’s resolution plan, but they commanded 86% of the total debt outstanding. Eight Capital, a special situations and distressed fund, was second in the running with a bid of Rs 25 crore and offer to transfer Rs 600 crore debt with a five-year repayment term.
Source: Economic times, May 13, 2018