20 February 2019: Mapletree Leather Goods, the sole resolution applicant for the Ruia Group-owned Falcon Tyres, which is currently undergoing insolvency proceedings under the Bengaluru bench of the NCLT, has accused Edelweiss Asset Reconstruction Company, among other lenders, of acting contrary to the provisions of the Insolvency and Bankruptcy Code (IBC) by rejecting its resolution plan.
On the other hand, lenders reasoned that although Mapletree put in a bid, its offer was rejected as the upfront payment was too low and it promised to pay around Rs 100 crore over a three-year timeframe.
In turn, lenders have suggested to Mapletree that if it is interested in the Falcon Tyre buyout,it may participate when the company is liquidated.
The lenders have raised concern about Mapletree’s ability to turn the stressed company around, given that it is involved in tanning and dressing of leather, manufacture of luggage handbags, saddlers and harnesses. The applicant on its part has proposed to set up a monitoring committee of nominees from the lenders, workmen, RP and others who will look after the progress of the turnaround.
Nevertheless, Mapletree has approached the NCLT asking it to order the lenders to consider its proposal.
In May 2018, at Edelweiss’ behest, the NCLT ordered commencement of the insolvency resolution process. However, it was the second time Edelweiss has resorted to legal means to settle its claim. In 2017, it had moved court seeking liquidation but had withdrawn its plea at later stages of the case.
This asset reconstruction company was roped in by Falcon Tyres in 2015 to identify investors and reshuffle the management with the aim of mitigating accumulated losses. By 2017, Edelweiss had acquired about 85 per cent of Falcon Tyres’s debt, becoming its largest lender. That year, moved court for liquidation.
The Ruia Group, led by industrialist Pawan Ruia, once considered the turnaround tycoon, acquired Falcon Tyres in December 2005 but by January 2015, lost control of the company after it became a minority stakeholder in its own firm.
Its other acquisitions – Dunlop India and Jessop & Company – also turned sick and closed down with the West Bengal government stepping in to take control of these two companies.