Bombay Rayon Fashion: Bankruptcy Court admits Bombay Rayon Fashion for insolvency resolution

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The bankruptcy court allowed a motion filed by an operating creditor of (BRFL) to admit the company to the corporate insolvency resolution process (CIRP) and appointed Santanu T Ray of AAA Insolvency Professionals as its professional resolution.

The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted the plea filed by Vikash Parasprampuria of Chiranjilal Yarn Traders against the textile manufacturer.

Bombay Rayon, in a filing with the exchanges, said Prashant Agrawal, its suspended board member, decided to appeal the decision to the appellate court.

“The debtor company (BRFL) has time and again by its letter, its invoices and by making a partial payment acknowledged its responsibility. Accordingly, the motion brought by the creditor is complete in all respects as required by law,” an NCLT division bench consisting of members Kishore Vemulapalli and Rajesh Sharma said in its June 7 order. “Therefore, we believe this is a good case for launching CIRP.

According to a filing, the company had reported a net sale of Rs 108.77 crore and a loss of around Rs 300 crore in the financial year 2021.

The court has now prohibited the directors of Bombay Rayon from transferring, encumbering, alienating or disposing of the company’s assets.

“The process according to the law is ongoing. A public announcement has been made and creditors are invited to make claims,” said resolution professional Ray.

According to Shahezad Kazi, a partner at law firm S&R Associates, until the NCLT’s admission into insolvency order was stayed or revoked, the debtor company’s admission into insolvency would remain in effect. “The legal remedy available to an aggrieved party is to appeal the NCLT’s order to the Court of Appeal. After admission to insolvency, the NCLT may authorize the withdrawal of the insolvency petition provided that a creditors’ committee (CoC) is first formed; and second, 90% of these CoCs consent to withdrawal,” Kazi added.

Since the entry into force of the insolvency and bankruptcy code, several textile and clothing brands, including

Reid & Taylor India, S Kumars Nationwide, Mandhana Industries and Provogue — have been referred for debt settlement.

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