In first resolution of 2021, MCPI Pvt Ltd takes over the reins of Surat-based Garden Silk Mills
The year 2021 saw its first resolution under the Insolvency and Bankruptcy Code (IBC), when the Ahmedbad bench of the NCLT approved the resolution application of Kolkata-based MCPI Private Ltd for Surat-based textile company Garden Silk Mills Private Ltd.
This is probably one of the fastest cases to be resolved under IBC in terms of time taken from admission to the order of resolution.
The insolvency application against Garden Silk Mills Private Ltd was filed by Invest Asset Securitization and Reconstruction Pvt Ltd and the application was admitted by NCLT on 24 June 2020. The order of resolution came on 1 January 2021.
The Resolution Plan
As per the resolution plan, MCPI Private Ltd for would pay an amount of Rs 747 crore to different creditors who had claimed outstanding dues of Rs 2,603 crore. The resolution plan had provision of paying Rs 717.5 crore to financial creditors against their total dues of Rs 2,090 crore, total hair cut of 66%.
While the resolution plan had provisions for full payment of workmen, employees and vendors’ dues, it made no provision for statutory dues which were to the tune of Rs 483 crore.
| Creditors | Claims admitted (Rs cr) | Provided for in the resolution plan (Rs cr) |
| Financial Creditors | 2,090 | 717.5 |
| Workmen and employees | 8.2 | 8.5 |
| Statutory dues | 483 | Nil |
| Operational Creditors (Other than employees and statutory dues) | 21.3 | 21 |
MCPI Pvt Ltd has created a special purpose vehicle (SPV) MCPI Polyster Private Ltd to carry to implement the resolution plan. As part of the implementation process, Garden Silk Mills Private Ltd will be delisted from the exchanges – it is listed on both BSE and NSE.
MCPI Private Ltd will then infuse Rs 747 crore into the SPV in one or more tranches either through equity, debt or both towards issuing new equity shares for Garden Silk Mills. All the payments to creditors as per the plan will be made within 90 days of the order of resolution and the SPV will then be merged with Garden Silk Mills.
MCPI Pvt Ltd will hold 100% stake in Garden Silk Mills upon merger of the SPV with the latter.
About Garden Silk Mills and MPCI Private Ltd
Garden Silk Mills Limited is a listed company with annual turnover of Rs 2877 crore (as on March 2020). The company is known for its Garden Vareli brands of women’s clothing.
The company is promoted by Praful A Shah and his family members. Together they held 57.63% in the company and the rest are held by public.
MCPI Private Limited (MCPI), on the other hand, is part of of The Chatterjee Group (TCG). It is a manufacturer of Purified Terephthalic Acid (PTA) which is the basic raw material for the polyester industry. It is headquartered in Kolkata and has its plant located in the industrial hub at Haldia, West Bengal.
