Enn Tee International Limited

Per: Avinash Kumar Srivastava, Member (Technical)

The present company application is filed under Section 54(C) of the Insolvency and Bankruptcy Code, 2016[hereinafter referred to as "the Code" or "IBC",2016 ] for seeking initiation of Pre Packed Insolvency Resolution Process (PPIRP) in respect of the ENN TEE International Limited (hereinafter referred as the Corporate Debtor).

The Corporate Debtor is a public limited Company incorporated on 15.02.1999. On the date of application, the Corporate Debtor was engaged in the business of manufacture of wearing apparel and exporter, manufacturer and supplier of industrial polyster yarn and cotton.

The total amount of debt payable by the Corporate Debtor to its Financial Creditor is stated to be Rs. 12,53,90,626/-(Rupees Twelve Crore Fifty Three Lakhs Ninety Thousand Six Hundred Twenty Six Rupees Only). The loan was initially sanctioned on 04.04.2009 but subsequently renewed from time to time and the last renewal was done on 30.03.2022.

The default by the Corporate Debtor is against the secured Financial creditor (unrelated) i.e State Bank of India to the tune of Rs. 31,41,123/-(Thirteen Lakhs Forty One Thousand one Hundred and Twenty Three only) which can be seen from the comparison of the sanctioned limits and the ledger , the summary of which is extracted below: Ans

The RP has also confirmed that there is a default against the Operational Creditors which has been examined from the notices received from the Operational Creditor.

The reason stated for losses of the company is that post demonetization in 2016 and with implementation of GST on textile industry in July 2017, the company started incurring losses as textile industry was an unorganized sector and due to non availability of working capital, the company was running on very low capacity but in spite of continuous losses from 2016 to 2021, the company continued to pay its dues to bank. But due to Covid pandemic, subsequent lockdowns imposed by Central Government , insufficient working capital and low utilization of plant capacity , the company incurred losses which is reflected from the balance sheet as extracted below:

The company has installed 7 knitting machines and allied equipments for manufacturing of narrow fabric and sold the entire production and one month advance orders in hand for the same. They have also upgraded two texturing machines by which production capacity of the machines has been increased to almost double which helped in reducing operational cost. The promoters also keep inducting the funds but due to continuous losses the same has been drained out. The infusion of funds by the promoters and bankers during 2016-2021 is produced as under:

The Corporate Debtor is duly registered MSME (Micro, Small & Medium Enterprise) under The MSME Act, 2002 in the category (Small Manufacturing Unit) and the requisite certificate is annexed as Annexure 1 with the application. The Corporate Debtor is eligible to file this application as per Section 54 A (1) of the Code.

A special resolution by the Members of the Corporate Debtor to initiate the Pre Packed Insolvency Resolution Process ("PPIRP") under Section 54 A (2)(g) of the Code was passed on 25.04.2022 and the same is produced as Annexure A filed by an affidavit on 09.09.2022.

The declaration given by majority of the directors of the corporate Debtor as per Section 54A (2)(f) of the Code in Form P6 is on record at Pg 40-41 marked as Annexure 8 of the application.

The financial creditor has approved the decision of the directors to file this application in Form P4 along with Form P2 as contemplated under Section 54A (3) of the Code and the approval note is placed at Pg 35-39 marked as Annexure 6 after considering the formalities completed by the Corporate Debtor including submission of Base resolution Plan.

The claims of 2 related Operational Creditors of the Corporate Debtor is Rs. 1,36,99,009/-(Rupees One Crore Thirty Six Lakhs Ninety Nine Thousand and Nine Only) and 61 Operational creditor of unrelated category to the tune of Rs. 2,77,53,315/-(Rupees Two Crores Seventy Seven Lakhs Fifty Three Thousand Three Hundred and Fifteen Only).

The financial creditor approved the appointment of Insolvency Professional, CA Ritu Rastogi having Registration No. IBBI/ IPA-001/IP-P00204/2017-18/10393, email [email protected]. It is produced at Page No. 31-32 as Annexure 4, thereby complying with the provisions of Section 54A(2) (e) of IBC, 2016 read with Regulation 14(5) of IBBI (Pre packed Insolvency Resolution Process) Regulations, 2021. The said Insolvency Professional proposed to be is appointed as Resolution Professional to conduct the PPIRP and to discharge duties before initiation of PPIRP.

The Resolution Professional's report under Section 54B (1)(a) of the Code in Form-P8 is produced at Page No. 43-44 and marked as Annexure 10 of the application.

Details of Base Resolution Plan It is stated by the learned counsel for the applicant that in view of benefits of all the stakeholders of the company, the proposal of Operational and Financial Restructuring under the PPIRP is as follows:

The declaration regarding non existence of avoidance transactions relating to the company and its directors as per Section 54C(3)(c) of the Code read with Regulation 16(2) of IBBI(Pre packed Insolvency Resolution Process) Regulations, 2021 in Form P7, is produced at Pg 42 and marked as Annexure 9 of the application.

The affidavit stating that the Corporate Debtor is eligible under Section 29A of IBC, 2016 to submit Resolution Plan has also been filed which is produced as Annexure C filed by an affidavit on 09.09.2022. Thus, the provisions of Section 54A (2)(d) of the Code are complied with.

The Debtor has also produced the audited financial statements of the company for the Year 2019-2020 and 2020-2021 and provisional financial statements as on 31.03.2022 & 25.04.2022 which are annexed as Annexure 12 of the application. Thus the corporate Debtor has complied with the provisions of Section 54C(3)(d) of the Code.

The Corporate Debtor has furnished name of Insolvency Professional to be appointed as Resolution Professional as per the provision of Section 54C (3)(b) of the Code. Such RP has also given consent in writing which is placed at Page nos. 31-32 as Annexure-4 of the application.

On perusal of the proceedings, we find that the Corporate Debtor has produced all the required documents and materials in order to comply the provisions of the Code. Therefore, we are inclined to admit this application liable to be admitted under Section 54C of the Code.

The application is complete in all respects and meets all requirements of Law. Hence, we admit this application and pass the following orders:-