have volunteered to seek liquidation within five months of the Insolvency and Bankruptcy Code coming into place. These include subsidiaries of IL&FS and HSBC.
Most of these companies
are either defunct or the local arms of foreign companies
that found it unviable to do business in the country.
Axiom Managed Solutions, a global firm rendering legal solutions, filed for liquidation in order to wind up its India business. “The company did not find it viable to run the business in India and decided to wind up,” said Manoj Kulshrestha, an insolvency professional who acts as liquidator in the case.
He added more than 70 per cent of work was over in the case. The value of the company’s assets is Rs 8 crore against liabilities of a little over Rs 7 crore. In voluntary liquidation, the value of the assets has to be greater than liabilities.
With the initiation of the voluntary liquidation process, companies stop carrying on business to facilitate winding up. Voluntary liquidation rules under the Insolvency and Bankruptcy Code 2016 were issued to help companies exit.
Before the Insolvency and Bankruptcy Code, a high court would appoint an official liquidator and that made the process cumbersome. Around 900 cases of winding up were pending till December.
Vinod Kothari, an insolvency professional, said in a number of cases the parent companies had been trying to invest in their subsidiaries but these investments had not taken off.
Among the companies that have chosen to wind up is RAD-MRO Manufacturing, which was planned as a joint venture by MRO-Tek Realty, a listed company whose shares have not been traded even once.
MRO-Tek Realty’s executives were arrested for evading Rs 1.7 crore in excise on goods imported for RAD-MRO Manufacturing.
In response to this report, the legal counsel of RAD-MRO Manufacturing and MRO-TEK Realty has clarified that the former went in for voluntary winding-up not because of any “distress” as mentioned in the report, but as a “good corporate governance practice”. The company’s financial status is still healthy, the counsel said. The statement also said that MRO-TEK Realty is a publicly traded firm and it is incorrect to state that its “shares have not been traded even once”. The counsel also said that the arrest of MRO-TEK’s executives was “completely unconnected and irrelevant” to the winding-up of RAD-MRO. We regret the errors.