VHM Industries to undergo insolvency resolution process
Mumbai-based textile company — VHM Industries Limited – will undergo corporate insolvency resolution process after the Mumbai-bench of the NCLT admitted the insolvency application submitted by State Bank of India (SBI).
SBI moved the NCLT with insolvency petition against VHM Industries Limited after the latter defaulted on payment of Rs 221 crore.
The SBI in its application has submitted that VHM Industries was availing by way of financial assistance under the sole banking arrangement till the year 2014.
In 2015, four new banks — Karur Vyasa Bank Ltd., Syndicate Bank, Corporation Bank and Canara Bank — joined for the purpose of extending financial assistance to the Corporate Debtor under Consortium Arrangement wherein SBI was the lead bank of the Consortium.
In addition to working capital credit facilities, VHM Industries had also availed a term loan under Consortium Arrangement in the year 2015. The credit limits sanctioned to the Corporate Debtor got renewed from time to time. The last such renewal of the credit limit was communicated to the Corporate Debtor was on 4 April 2019.
SBI had said in its application that the respondent was facing liquidity issues in running the business activities. Due to this, the operation and conduct of the loan accounts in respect of various credit facilities became irregular. The date of default was 25 September 2019.
Thus, in accordance with the guidelines by the Reserve Bank of India, the account of the Respondent was classified as Non-Performing Asset (NPA) with effect from 23 December 2019. Thereafter, SBI was duly following up with the Corporate Debtor but was unable to regularize the accounts. Subsequently, SBI had issued a notice under Section 13(2) of the SARFAESI Act, 2002 dated 9 September 2021 to VHM Industries as well as the Guarantors of the Corporate Debtor.
In its response before the NCLT, VHM Industries disputed the amount of default (Rs 221 crore as claimed by SBI), and said that the actual amount of default was Rs 148 crore.
However, NCLT in its observation said that it is clear that the VHM Industries has defaulted in repayment of debt, and that this is a fit case to be admitted under section 7 of the Insolvency & Bankruptcy Code, 2016.
The NCLT appointed Sunil Kumar Agarwal as the IRP on recommendations of SBI.
VHM Industries manufactures Cotton Fabrics, Polyester Viscose, Polyester Cotton, Polyester Woolen, Shirting and Suiting fabrics. It has an installed production capacity is 18 million meter per annum. The company owns the brand of “VHM International”.
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