New Delhi, Feb 5 (IANS): A series of proxies rigged up with great aplomb by the former promoter of Reid & Taylor has muddied the waters and delayed the entire process of finding a new owner to resuscitate the company.

Against the backdrop of the crucial NCLT meeting on Tuesday to take a view on the sale of Reid & Taylor as part of the IBC process, it is pertinent to mention that after two failed attempts at selling the company to the right bidder and despite creditors of the company having passed a resolution to liquidate the said company, not a single genuine investor has filed an EOI even as the 270 days were getting over.

Needless to say, the resolution professional (RP) has put in all the effort to get a resolution applicant. However, all efforts at doing so have failed primarily because the business was running into cash loss and the facilities, even at optimum capacity, cannot achieve a fourth of the turnover which the promoter used to disclose. The brand was owned by overseas entities whom the company used to pay a license fee to.

Immediately subsequent to filing liquidation by RP, the unregistered employees' union filed a petition that the RP was negligent in his efforts to get investors and they, in turn, propped up an investor called SPGP HOLDING (Hong Kong-based investor) and therefore he should be allowed to bid as liquidation would affect the livelihood of more than 1,000 workers.

NCLT, without even inquiring into the efforts made by the RP and ascertaining financial creditability of the investor, agreed to give time. The first fallacy was exposed when the investor claimed to have a net worth of more than Rs 50 crore. Moreover, the investor even dared to give self-certified net worth of Rs 50 crore, whereas on scrutiny the net worth was found to be Rs 7 crore as per accounts.

Instead of taking action for giving wrong declaration, NCLT decided to give time to deposit Rs 50 crore to show their genuine interest. Pankaj Agarwal appeared before the honourable bench and expressed inability to deposit any money.

The second fallacy was exposed when the employees' union introduced another investor called CFM ARC which expressed their interest to conduct due diligence and submit a resolution plan within two weeks. They handed over a Rs 2 crore pay order towards refundable deposit. On expiry of two weeks, ARC informed the bench that they were not interested in the resolution plan as they had found during due diligence that the brand was not owned by the company and the licence to use the brand had been terminated.

Manufacturing facilities are one-third of what they thought and they found it difficult to effect a turnaround. This has exposed the employees' union's game plan. Not only are the dilatory tactics being done with deliberate intent, but it is emerging that the union is merely a stalking horse for the promoters who don't want to let go of their company.

Fallacy three is now upon us. The employees' union has now rigged up yet another investor called Indian Gas Ltd in what has turned into a revolving door. The overarching shadow of the promoter and his invisible hand is known to one and all. Yet the flawed IBC process chooses to ignore this regulated delay.

On direction from the NCLT member to Finquest who is creditor for more than Rs 800 crore to verify genuineness of the so-called Indian Gas Ltd who has come before the bench after CFM ARC opted out, Finquest owner Bharat Patel has questioned the representative of Indian Gas Ltd and has found out that this attempt by the erstwhile promoter and employee union is also fake.

It was queried by Patel as to when and where did Indian Gas Ltd show interest. Patel reckons that Indian Gas Ltd is another dummy in the series of dummies that the promoter/union has created. It has no financial and administrative capacity, nor financial strength to provide a resolution plan. In spite of the above, the bench thought it right to allow him to do due diligence through statutory time limit 270 days over stipulated time by statute.