Bilcare Ltd to undergo insolvency resolution process after NCLT allows ARCIL petition

The Mumbai bench of the National Company Law Tribunal (NCLT) has allowed the initiation of Corporate Insolvency Resolution Process (CIRP) against Bilcare Ltd based on the application filed by Assets Reconstruction Company India Limited (ARCIL).

ARCIL moved the NCLT after Bilcare Ltd failed to pay an amount of Rs 235 crore which became due on 15 December 2019.

Facts of the case

In October 2013, the South Indian Bank sanctioned a Standby Letter of Credit Facility to the Corporate Debtor for an amount of $21.7 million, and the credit facility was executed on 09 October 2013. As per the terms agreed, the SBLC Facility was valid for 5 years with a bullet repayment at the end of 5 years.

South Indian Bank entered into an assignment agreement with ARCIL on 4 July 2018 and assigned all rights, title and interest in the SBLC Facility in favour of ARCIL.

The fact of the assignment was communicated to Bilcare Ltd, and the corporate debtor acknowledged the outstanding dues and undertook to resolve the debt.

However, the corporate debtor failed and neglected to repay the outstanding amount under the SBLC Facility. After that ARCIL issued a Recall Letter on 10 October 2018 to the Corporate Debtor seeking repayment of Rs. 187 crore.

ARCIL filed an insolvency application against Bilcare in in February 2019. However, during the pendency of the said petition, the Corporate Debtor approached ARCIL to amicably settle its outstanding dues.

Pursuant to the discussions, ARCIL and the Corporate Debtor executed consent terms dated 26 September 2019.

However, the Corporate Debtor again failed and neglected to abide by the terms of the Consent Terms and failed to make payment of instalments as agreed therein.

ARCIL through a letter dated 17 December 2019 intimated the corporate debtor of the continuing breach of the Consent Terms, and cancelled the said Consent Terms.

Owing to the breach of the Consent Terms on the part of the Corporate Debtor as per clause 4(c), the entire amount of Rs 235 crore as on 15 December 2019 along with the further interests, charges and expenses till realisation had now become due and payable by the Corporate Debtor to ARCIL.

About Bilcare Ltd

Bilcare is a Mumbai-based producer of PVC-based Films and Aluminium Foils that are used mainly for packaging of solid dosage pharmaceutical products and other applications. The company had a consolidated turnover of Rs 889 crore in the 2021-22, and posted a loss of Rs 4 crore. The company is listed on BSE, and the last traded price of its shares were Rs 56.20

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