MEP Infrastructure Developers to undergo insolvency resolution process
Mumbai-based MEP Infrastructure Developers Ltd will undergo corporate insolvency resolution process after the Mumbai bench of the NCLT admitted the insolvency application against the company filed by financial creditor Bank of India.
The insolvency petition was filed against MEP Infrastructure Developers (corporate debtor) after it failed to pay outstanding dues to the tune of Rs 128 crore.
According to the submission made by the financial creditor – Bank of India – the corporate debtor had availed certain financial assistance from Bank of India under Multiple Banking Arrangements (MBA) led by IDBI Bank since 16 March 2010. Initially, Bank of India as a member of the MBA had sanctioned Non-Fund Based Credit Limit of Rs.150 crores through its first sanction letter dated 16 March 2010.
A recall notice was issued on 04 October 2022 by recalling the entire credit facilities sanctioned to the corporate debtor which were outstanding.
MEP Infrastructure Developers showed interest in settling their dues out of court and also approached the Financial Creditor with OTS proposals on 09 September 2022 and 16 December 2022 and the last one being on 07 August 2023. However, the financial creditor has not considered the same since it involves huge haircut and there was no clarity on the source of funds.
The NCLT noted that the corporate debtor acknowledged its liability in respect of dues payable to the financial creditor in the One Time Settlement (OTS) proposal vide letter dated 07 August 2023 and admittedly the Corporate Debtor has utilized the said facilities/loan.
Therefore, the tribunal was of the considered view that the OTS proposal is within the definition of the ambit of ‘acknowledgement of debt’. The tribunal also noted that there was no dispute with regards to the outstanding debt. Therefore, the NCLT admitted Bank of India’s insolvency application against MEP Infrastructure Developers.
The tribunal appointed Ravindra Kumar Goyal as the Interim Resolution Professional.
About MEP Infrastructure Developers
MEP Infrastructure Developers Limited (MEP IDL) established in year 2002 and listed since 2015 has become a recognized name in the Indian road infrastructure segment. The Company along with its subsidiary companies has a strong presence in Maharashtra, Rajasthan and Madhya Pradesh. The company is primarily involved in the integrated road infrastructure development and is a key player for OMT, EPC and Toll Collection projects in India. MEP IDL further added a portfolio of various Toll collection & OMT projects.
The company along with its subsidiaries has a successful track record in executing large OMT Projects for the Government including the State Governments.
The Company’s material Subsidiary viz MEP Infrastructure Private Limited (MIPL), achieved Profit After Tax of Rs 40 crore (FY 2019-20), Rs. 83 crore (FY 2020-21), Rs 114 crore (FY2021-22). However, the said subsidiary incurred loss of Rs 9 Crore (FY 2022-23).
MIPL suffered a loss of toll revenue due to successive lockdowns declared by government since March 2020. The reduction in traffic at Mumbai Entry Points in turn impacted the toll collection and liquidity of MIPL. The Company filed claims of Rs. 597 Crores under Force Majeure for loss in toll revenue during March 2020 to May 2021.
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