First case filed after new norms come into force, NCLT admits plea.
The National Company Law Tribunal admitted on Wednesday an insolvency petition filed by UB Engineering Ltd, part of the Vijay Mallya-owned UB Group.
Its Mumbai bench, where the petition was filed, appointed insolvency professional A K Mehta to initiate the process.
“This is the first such case NCLT has admitted (under the new law),” a person who was part of the filing process told this newspaper.
Following the NCLT decision, UB Holdings, which has 37 per cent of the equity, loses control over the affairs. Failing a resolution, the company will go for liquidation. It owes Rs 450 crore to five banks and went to the Tribunal earlier this month.
Mehta, advocate with Delhi-based Dhir & Dhir Associates, declined to comment. An e-mail to the UBEL company secretary did not get a response.
Explained a source, “Since there is no support from the promoter, going to NCLT under the new code might help the company get buyers.”
The source added the employees and the management felt this was the best option, considering the amount of pressure from creditors, both secure and unsecured.
The source further said, “The promoter being Vijay Mallya, bankers had not accepted the restructuring proposal and the company could not book new orders for two-three years. Hence, the company had to apply to NCLT to survive.”
Axis Bank, YES bank, Corporation Bank, IDBI Bank and Laxmi Vilas Bank are UBEL’s lenders. The company has classified term loans, cash credits and other facilities taken from banks as ‘Other Current Liabilities’. At the end of FY16, these were Rs 434.9 crore, according to the annual report.
Though listed, the stock has been suspended from the BSE. Its market captalisation had earlier eroded to Rs 13.5 crore.
UB Engineering specialised in engineering projects, infrastructure, on-site fabrication of structures, installation, testing and commissioning of electrical and mechanical equipment.
It also has pre-qualification credentials in electrical sub-station projects up to 400 Kv.
However, like some of its sister concerns, which have suffered after the series of problems emanating from Mallya’s failed airline venture, Kingfisher, it has been struggling to service its debts.
The banks had classified the account of the company as a non-performing asset with effect from April 1, 2014.
Other than this case, an insolvency petition filed against Innoventive Industries has been accepted. Unlike UBEL, Innoventive’s creditors had moved NCLT.