How popular brands of yesteryears failed to rekindle their old world charm under IBC
If you have not yet realized how the old world around you is falling apart, just look at the list of popular brands and companies of yesteryears that have gone into liquidation under the Insolvency and Bankruptcy Code (IBC).
You would find in the list many old brands and companies which you could relate to your younger days or childhood depending on what age group you belong to. The list is such that it could make many a millennial nostalgic.
You would be sad to know that the popular brand of fan, Kahitan, would no longer be giving you respite from the hot and humid conditions we are so used to. Khaitan Electricals Limited, the company that used to manufacture fans and a range of electrical appliances is shutting shop as the company has gone into liquidation after it failed to get a bidder during the Corporate Insolvency Resolution Process (CIRP) under the IBC.
The company owed Rs 550 crore to bankers and financial institutions. What is even more disheartening is the fact that no bidders showed interest putting up any revival plan during the CIRP.
If Hamara Bajaj was once the cry of the upwardly mobile Indian middle class, LML Vespa was used to the style icon for that middle class. If Bajaj Scooters in 1980s and 1990s were known to be sturdy workhorses, LML was known for its cool quotient.
Kanpur-based Lohia Motors Ltd, despite becoming the second largest scooter makers in India, failed to live up to the competition in the Indian market that suddenly saw many new entrants challenging the incumbents. In May 2017, the company filed for insolvency and after failing to find a suitable buyer – four resolution applicants had submitted resolution plan – the Committee of Creditors decided to liquidate the company. It owed Rs 493 crore to financial creditors, and the highest bid it received from resolution applicant Rimjhim Ispat was Rs 243 crore, which was lower than the liquidation value of Rs 343 crore.
Another Kanpur-based firm Rotomac Global, the maker of Rotomac pens which was made popular by the then heart-throb Ravina Tandon featuring in its ad in mid 1990s. Insolvency proceedings against Rotomac Global and one of its sister firms Rotomac Exports, both of which were already defunct companies, were initiated by Bank of Baroda (BoB) in September of 2017 and in 6 months both the firms were ordered by the National Company Law Tribunal (NCLT) to be liquidated.
The two together owed over Rs 6,800 crore to banks but their combined liquidation value was a mere Rs 142 crore. No wonder, neither of them got any bids during the CIRP.
S Kumars Nationawide Ltd, the maker of Reid and Taylor and Belmonte brands of clothings, has also been ordered to be liquidated. So has been its subsidiary – Reid and Taylor (India) Ltd. S Kumars Nationwide owed Rs 8,000 crore to bankers, and the only bidder which showed interest in buying it offered Rs 400 crore as part of its resolution plan, a tad higher than the liquidation value of Rs 331 crore. The resolution plan was rejected and the company was ordered to be liquidated in June 2019.
Reid & Taylor (India), the subsidiary, owed Rs 4,000 crore to bankers and commanded a liquidation value of Rs 130 crore. No resolution applicant came forward to bid for the company.
Provogue India Ltd could not find a savior either in the CIRP as the CoC rejected the two bids that they received for the manufacturer and retailer of men’s clothings. The highest bid it received was that of Rs 111 crore against Rs 267 crore that it owed to its creditors.
Not so long ago, Su-kam inverters were bringing light to people’s life. But heavy debt pulled the plug on its manufacturer Su-Kam Power Systems Ltd in April 2019 when the National Company Law Tribunal ordered its liquidation as the CIRP failed to attract any bidders. Su-Kam owed over Rs 400 crore and had a liquidation value of only Rs 148 crore.
Paint manufacturer Jenson and Nicholson (India) Ltd faded away in history as mounting debt of around Rs 3,000 crore forced bankers to take it to insolvency court which in absence of any takers during the CIRP ordered liquidation of the company.
There are many more popular names and brands like Moser Baer, Zenith Computers, Falcon Tyres, Firestar Diamonds, etc have become history after these debt-laden companies failed to secure resolution under IBC. The story behind their failure could be varied but they met the same fate – Liquidation.
How popular brands lost their old-world charm
| Corporate Debtor | Admitted creditors’ claims (Rs Cr) | Liquidation value (Rs Cr) | No of resolution plans received | Highest resolution value received (Rs Cr) |
| Khaitan Electricals | 549 | 36.5 | 0 | NA |
| LML India | 493 | 323 | 4 | 243 |
| Rotomac Global | 3944 | 142 | 0 | NA |
| Rotomac Exports | 2886 | 0.41 | 0 | NA |
| S Kumars Nationwide Ltd | 8,270 | 331 | 1 | 400 |
| Reid & Taylor India Ltd | 4,163 | 129 | 0 | NA |
| Provogue India Ltd | 267 | 75 | 2 | 111 |
| Su-Kam Power Systems | 404 | 149 | 0 | NA |
| Jenson & Nicholson (India) Ltd | 2899 | 35 | 0 | NA |
| Moser Baer | 4851 | 337 | 0 | NA |
