As textile firm Alok Industries heads into liquidation, about 12,000 permanent employees of the company are set to lose their jobs.The Ahmedabad bench of the NCLT admitted insolvency proceedings against the textile firm last July. A consortium of lenders, led by the State Bank of India (SBI), is claiming dues of over INR 23,000 crore from Alok Industries.
The 270-day deadline before which lenders had to finalize a resolution plan ended April 14 this month. Plans to recover the distressed firm failed as lenders were unwilling to accept an offer that involved a substantial cut. Earlier last week, lenders to Alok Industries did not approve an offer by Reliance Industries and JM Financial ARC to acquire the bankrupt company.
Only 70 per cent of the lenders endorsed the revised all-cash offer of Rs 5,050 crore, which was just about Rs 100 crore higher than the previous one. For a resolution plan to be passed, at least 75 per cent of the lenders must vote in its favor. Tthe firm is headed for liquidation and could be one of the biggest labor casualties since the implementation of the bankruptcy code.
There were 11,759 full-time employees as on March 31, 2017, with the total staff strength around 18,000. Meanwhile, staff costs amounted to Rs 283.31 crore during that financial year. The insolvency proceedings are also expected to impact hundreds of small vendors and service providers to the company. Almost 2.05 lakh equity shareholders, including public financial institutions and retail investors, are also looking in the face of losses as the company heads into liquidation.