MUMBAI: Formation Textile, the US-based winning bidder of Mandhana Industries NSE 0.00 %, has alleged that lenders to the company led by Bank of Baroda NSE -0.24 % as well as its resolution professional have acted fraudulently during the insolvency process by hiding facts to get a higher offer for the assets. 

The US-based firm has filed an application in NCLT Mumbai seeking its help to look into the facts that have raised questions about the transparency of the insolvency proceedings. It also wants to be allowed to modify the plan to make it viable, according to the actual information associated with the performance of the company. 

“After the takeover of the control and management of MIL, the applicant has realised that the CoC and the resolution professional have, during the CIRP of MIL, deliberately, fraudulently and wilfully suppressed material facts and information from the applicant...,” Formation Textiles has said in the application reviewed by ET. The company that took ownership of the stressed textile company on January 31 this year has said that concealed information pertains to actual financial position of the asset which Formation has discovered is much lower than what was shared with it as part of the information memorandum. 

The other information is related to the ongoing litigation and investigation initiated by the government and statutory authorities such as the Income Tax and customs departments, disputes by and against Mandhana as well as the company’s prospective liabilities. 

The company said that it was also handed over charge of Mandhana with much delay that Formation claims was causing “diminution of the asset quality”. The company's resolution professional Charu Desai had claimed that she could only hand over the company after the upfront payment of ₹175 crore that Formation had promised to pay as part of the plan. Its total offer guaranteed ₹480 crore to the lenders.

Published On : 09-07-2019

Source : Economic Times