By
IVRCL gets bid for sale of company as going concern under liquidation
Photo Credit: Thinkstock

Hyderabad-based construction firm IVRCL Ltd is set to become the first company under liquidation to be sold as a going concern.

The cash-strapped infrastructure company said in a regulatory filing it has received a bid from Gabs Megacorp Ltd for Rs 1,654.7 crore ($225 million).

Secunderabad-based Gabs Megacorp was set up in 1996 and was previously known as Reliance Fire & Safety Ltd, according to company database platform Tofler.

The sale would be subject to the decision of the National Company Law Appellate Tribunal (NCLAT), IVRCL said. The appeals tribunal is hearing a petition that IVRCL had filed against the National Company Law Tribunal’s order to liquidate the company, which owes more than Rs 14,000 crore to financial and other creditors.

The tribunal had, on July 29, 2019, ordered the liquidation of the company after no suitor emerged during the resolution process under the Insolvency and Bankruptcy Code (IBC).

The insolvency proceedings were started by IVRCL's main lender State Bank of India (SBI) in January 2018. Only one bidder, a consortium led by Maharashtra-based First Global Pvt. Ltd, showed interest in the construction firm.

However, the offer was rejected by the Committee of Creditors (CoC) as it did not comply with certain conditions and the companies in the consortium did not meet the eligibility criteria of related parties.

The liquidation value of the construction company around mid-last year was about Rs 1,800 crore.

Sutanu Sinha, IVRCL’s resolution professional during the insolvency process, was the official liquidator.

IVRCL has total claims of approximately Rs 14,300 crore while the debt admitted stands at around Rs 13,400 crore owed to financial creditors and Rs 585 crore towards operational creditors against claims of Rs 3,484 crore.

In 2015, IVRCL had tried to come out of the debt trap after implementing the Reserve Bank of India's Strategic Debt Restructuring (SDR) scheme where lenders including Canara Bank converted a part of their debt into equity.

For the October-December quarter of 2019, the company incurred a net loss of Rs 428.02 crore against a net loss of Rs 410.11 crore a year earlier. Sales more than halved to Rs 81.75 crore from Rs 170.99 crore.

Leave Your Comment(s)