Bankruptcy resolution process begins at McLeod Russel

The bankruptcy resolution process has started in bulk tea producer McLeod Russel India, following the admission of IL&FS Infrastructure Debt Fund’s insolvency petition at the Kolkata bench of the National Company Law Tribunal (NCLT).  The creditors will have to submit their claims by February 24 and the insolvency process is estimated to be completed by August 9.

McLeod Russel defaulted repayment of ₹347 crore to the fund of IL&FS in November 2019. The interim resolution professional (IRP) Ritesh Prasad Adatiya will evaluate the claims from lenders and assess the financials of the debtor.

With the commencement of the Corporate Insolvency Resolution Process (CIRP) in McLeod Russel, the Kolkata-based Williamson Magor Group will end up with no substantial business under its kitty. The family of Brij Mohan Khaitan, owners of Williamson Magor group, had lost control of dry cell battery-maker Eveready Industries and McNally Bharat Engineering because of high leverage. McLeod Russel was the last major business that it was controlling.

The group had borrowed heavily to save the engineering and construction company, McNally, by pledging holding in McLeod Russel and Eveready. But the crisis in McNally deepened with the slowdown in infrastructure business in the country. Banks called back pledged shares of promoters and the Khaitan family’s holding in Eveready and McLeod slipped to a single digit.

McNally filed for bankruptcy first. The company was brought to insolvency by Bank of India for defaulting ₹479 crore payment in May 2022. The engineering company owes ₹4,841 crore to financial creditors. Kolkata-based Shrachi Group is leading the race to acquire McNally. The other bidders are Naveen Jindal-led Nalwa Steel and Power, Amit Metaliks and Rashmi Metaliks.

The Burman family, which controls Dabur Group, picked up stake in Eveready when Khaitans’ holding shrank with the auctioning of pledged shares by banks and financial institutions to settle their dues in 2020. Finally, they made the open offer and took over the control as promoters of the battery maker.