JTL Industries acquires RCI Industries for Rs 46.5 crore

The National Company Law Tribunal (NCLT), New Delhi Bench, has approved the resolution plan submitted by JTL Industries Limited for the insolvent RCI Industries and Technologies Limited, bringing a conclusion to a corporate insolvency resolution process (CIRP) that lasted nearly three years. The plan, valued at ₹46.50 crore, was approved by the Committee of Creditors (CoC) with an overwhelming 98.05% majority vote. The tribunal’s order paves the way for JTL Industries to acquire a 95% stake in the corporate debtor, effectively reviving the metal manufacturing company.

A protracted process

The CIRP for RCI Industries was initiated on November 25, 2022, on an application filed by Standard Chartered Bank (Singapore). The process saw multiple extensions and a re-initiation of the Expression of Interest (EoI) process to maximize value. The Resolution Professional received seven resolution plans, from which JTL Industries emerged as the successful applicant.

Distribution of the resolution amount

The total admitted claims of all creditors stood at a substantial ₹408.95 crore. The approved resolution amount of ₹46.50 crore represents a significant recovery for the creditors, though the haircut—the loss compared to their admitted claims—varies significantly by creditor class.

The following table details the share of the resolution amount for each category of creditor, as per the NCLT order:

Note: The total payout is ₹45.12 crore, with the remaining ₹1.38 crore allocated to cover unpaid CIRP costs.

Key takeaways from the resolution:

• Financial creditors bear the largest haircut: While they receive the bulk of the payout (₹44.15 crore), their recovery is only about 15% of their admitted dues of over ₹268 crore.
• Operational creditors receive minimal payout: Suppliers and vendors will recover less than 1% of their claims, with some receiving nothing.
• Workmen and employees protected: In line with the IBC’s objective of protecting employee interests, the claims of workmen and employees are paid in full (100%).
• Exclusion of disputed properties: The resolution plan explicitly excludes two industrial properties in Baddi and Nalagarh, Himachal Pradesh, which are subject to ongoing litigation. Any future recovery from these assets will be pursued by the financial creditors separately.

The NCLT, in its order, reiterated the settled legal principle of non-interference with the “commercial wisdom of the CoC,” emphasizing that its role is not to evaluate the financial terms of the plan but to ensure it complies with the law.

JTL Industries has been directed to implement the plan within 60 days, marking a new beginning for RCI Industries and providing a final, albeit reduced, recovery for its creditors.

Also See: NCLT admits Kamachi Steels to insolvency over Rs 40.77 crore debt