The Economic Times daily newspaper is available online now.

    Mandhana buyer Formation Textile alleges foul play in resolution process

    Synopsis

    US co says RP and lenders wilfully suppressed facts, wants to be allowed to modify plan.

    Untitled design (4)
    Formation textile's total offer guaranteed ₹480 crore to the lenders.
    MUMBAI: Formation Textile, the US-based winning bidder of Mandhana Industries, has alleged that lenders to the company led by Bank of Baroda as well as its resolution professional have acted fraudulently during the insolvency process by hiding facts to get a higher offer for the assets.

    The US-based company has filed an application in NCLT Mumbai seeking its help to look into the facts that have raised questions about the transparency of the insolvency proceedings. It also wants to be allowed to modify the plan to make it viable, according to the actual information associated with the performance of the company.

    "After the takeover of the control and management of MIL, the applicant has realised that the CoC and the Resolution Professional have, during the CIRP of MIL, deliberately, fraudulently and willfully suppressed material facts and information from the applicant...," Formation Textiles has said in the application reviewed by ET.

    The company that took ownership of the stressed textile company on January 31 this year has said that concealed information pertains to actual financial position of the asset which Formation has discovered is much lower than what was shared with it as part of the information memorandum.


    mandhana.


    The other information is related to the ongoing litigation and investigation initiated by the government and statutory authorities such as the Income Tax and customs departments, disputes by and against Mandhana as well as the prospective liabilities of the company.

    The company led by one Piyush Viradia said that it was also handed over charge of Mandhana with much delay that Formation claims was causing "diminution of the asset quality". The company's resolution professional Charu Desai had claimed that she could only hand over the company after the upfront payment of Rs 175 crore that Formation had promised to pay as part of the plan. Its total offer guaranteed Rs 480 crore to the lenders.

    Last week, ET had reported that lenders have moved the NCLT asking it to cancel Formation's plan due to its failure to pay up the upfront amount. In its application, Formation has stated that it has invested a total of Rs 93 crore in the company and wants the NCLT to pass an order granting status quo on further payments to be made by it until it takes a call on the allegations made by Formation.

    The RP refused to offer any comment till press-time.

    Mandhana Industries owes a total of Rs 1,180 crore to lenders. Earlier, in the case of Amtek Auto and Metalyst Forgings too, winning bidders had dragged the resolution professional to court over alleged discrepancies in information shared with them.



    (You can now subscribe to our Economic Times WhatsApp channel)
    ( Originally published on Jul 09, 2019 )
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more

    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in