NCLT gives nod to initiate insolvency proceedings against Technofab Engineering
Corporate insolvency resolution process (CIRP) has been initiated against Technofab Engineering Limited, the New Delhi-based engineering and construction company informed the exchanges on 25 November 2022.
The New Delhi bench of the National Company Law Tribunal (NCLT) on 18 November 2022 admitted the insolvency application against Technofab Engineering Limited filed by public sector bank State Bank of India (SBI). The application was filed by SBI after Technofab Engineering defaulted on a payment of Rs 67.60 crore.
As per section 17 of the Insolvency and Bankruptcy Code, the powers of the Board of Directors of Technofab Engineering stands suspended and such powers will be vested with Insolvency Professional, Pradeep Kumar Kabra, who has been appointed as an Interim Resolution Professional.
The interim resolution professional in a submission made to exchanges said that in consonance with the stipulations contained in Section 14 of the Code, a moratorium has been declared vide the aforesaid order passed by NCLT, whereby, the following shall be prohibited:
- the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
- transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
- any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
- the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.
The company posted a turnover of Rs 115 crore in 2021-22 compared to that of Rs. 38 Crore in the previous year. It incurred a loss of Rs. 79.78 crore in 2021-22 compared to the loss of Rs. 127.94 crore incurred in the previous financial year.
Technofab Engineering was unable to complete various projects in time, performance bank guarantees of the company were also invoked by other parties, and non-recovery of its funds due to various reasons and hence defaulted on repayment of dues to lenders, consequently the lenders had classified the loan balances of the company as nonperforming assets.
Upon the account becoming NPA, the banks have stopped charging interest from July-2019.
As per auditors’ calculation unprovided/uncharged interest for the quarter ended 31 March 2022 was Rs. 10 crore and total unprovided/uncharged interest from July-2019 to March 2022 is Rs.103 crore.
The net worth of the company is negative as at 31st March 2022. The Company has delayed/defaulted in payment of loans and interest and loan accounts have been classified as non-performing assets by banks.
The company is listed on BSE, and has a public shareholding of over 51% with FIIs/FPIs holding around 5% of the company shared. The company is promoted by Arjun Gupta and his family.
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