NCLT Mumbai Sanctions QVC Exports Resolution Plan for Karthik Alloys Limited With Unanimous CoC Backing

In Ashwini Fal Dessai and Ors. Vs Anneel Saraogi, the National Company Law Tribunal (NCLT), Mumbai Bench, approved the resolution plan of QVC Exports Private Limited for Karthik Alloys Limited. The plan carried a 100% vote of the Committee of Creditors (CoC). This article summarises the process, the financial terms and the directions of the Tribunal.

How the CIRP Unfolded

  • The corporate insolvency resolution process (CIRP) of Karthik Alloys Limited (CIN: U31200GA1992PLC001969) began by an order dated 17.12.2019 in C.P.(IB)-2119(MB)/2019, on a Section 9 application by Vedanth.com Worldwide Ltd., an operational creditor.
  • Mr. Anneel Saraogi was appointed Interim Resolution Professional and confirmed as Resolution Professional in the second CoC meeting held on 25.02.2020. A public announcement in Form A was made on 06.01.2020 (Kolkata and Goa newspapers), and the CoC's first meeting took place on 30.01.2020.
  • Form G was issued on 01.03.2020 and five expressions of interest (EoI) were received, with 23.04.2020 as the last date for plans. The pandemic disrupted the process, and the CoC in its fourth meeting on 13.07.2020 extended the time by a further 30 days from 14.07.2020.
  • A revised Form G was issued on 17.09.2020. Two EoIs came in by 02.10.2020, from QVC Exports Pvt. Ltd. (with CFM ARC as Financial Planner) and Assam Valley Finance and Investments Private Limited. Both submitted plans on 05.11.2020.
  • The Assam Valley plan was found non-compliant on earnest money: the bank guarantee provided as EMD had expired and was not renewed despite the Resolution Professional's request.
  • After renegotiation, the final QVC Exports plan was approved in the CoC's 20th meeting on 13.07.2021, by e-voting, with 100% of members in favour.
  • The Resolution Professional issued a Letter of Intent on 16.07.2021 and the applicant furnished a Performance Bank Guarantee of Rs.50 lakhs the same day (issued by SBI).
  • The registered valuer determined Fair Value at Rs. 22,09,52,444.00 and Liquidation Value at Rs. 14,78,75,882.00.
  • The application under Section 30(6) was filed on 19.07.2021.

The Resolution Applicant

QVC Exports Private Limited, incorporated at Kolkata in August 2005 [CIN: U27109WB2005PTC104672], deals in import and purchase of manganese ore and supplies ferro alloy manufacturers and traders. It confirmed its eligibility under Section 29A, stating that its connected persons had no conviction in the preceding five years, that it was not disqualified as a director under the Companies Act, 2013, was not a wilful defaulter under RBI guidelines and was not debarred by SEBI.