NCLT orders initiation of insolvency resolution for REI Agro

Kolkata, March 7 (IANS) The National Company Law Tribunal (NCLT) bench here has ordered initiation of the corporate insolvency resolution process in respect of Basmati rice exporter REI Agro, which was allegedly involved in a bank loan fraud, the company said on Tuesday.

“..pursuant to filing of an application by Surendra Kumar Joshi, an operational creditor of the company, the NCLT, Kolkata, has ordered for initiation of the Corporate Insolvency Resolution process in respect of the company under the provision of Insolvency and Bankruptcy Code, 2016 vide its order dated February 27…,” the company said in a filing to BSE.

The city-based company allegedly defrauded a 20-lender consortium, led by public sector UCO Bank, through conspiracy, cheating and forgery. The consortium of bankers had advanced a massive Rs 5,262 crore loan to the Basmati rice processing and marketing company.

On behalf of the consortium, UCO Bank had filed a recovery suit in the debt recovery tribunal (DRT) nearly two years ago over the staggering unpaid debt.

After getting instruction from the Reserve Bank of India (RBI), the lenders had declared the company’s account a fraud and sent the report to the Central Bureau of Investigation (CBI).

On the basis of the complaint, the central investigating agency had registered a case against REI Agro and accordingly conducted searches at four premises of the company and its directors in October, 2015, for allegedly causing a loss of around Rs 3,815 crore to the consortium.

United Bank of India (UBI) had also filed a winding up petition against REI Agro in the Kolkata High Court in 2014 for failing to repay Rs 224 crore loans borrowed from the bank.

By the order of the NCLT, the powers of the board of directors of the company stand suspended and such powers will be vested with Anil Agarwal, who has been appointed as an Interim Resolution Professional to carry out all compliance as per the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) in respect of the firm.

After passing of the order, the NCLT granted a moratorium to the company. It prohibits any action to foreclose, recover or enforce any security interest created by the lenders in respect of its property, including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

The company posted a Rs 466.57 crore loss during the nine months ended December, 2016.