Will the Lenders of Kwality Ltd accept the revised bid of Haldiram Snacks?

Kwality Ltd in the year 2016 announced that it had raised an amount of Rs 300 crore and an additional commitment of Rs 220 crore from KKR India Financial Services. This amount was raised by the kwality Limited which is a dairy company to get fund for their expansion plan and for entering in the consumer segment.

 Kwality Limited is a dairy company that is engaged in the business of manufacturing of dairy products and the processing of milk. Their dairy products include lassi, ghee, milk powder, types of flavoured milk, etc. Kwality has two units for milk processing one in Dibai and other in Softa.

When was the CIRP initiated against Kwality? 

On December 11, 2018, National Company Law Tribunal (NCLT)ordered to initiate a corporate insolvency resolution process (CIRP) after KKR filed a plea before the tribunal against Kwality when it was not able to pay off the dues. 

Shailendra Ajmera was appointed as the Resolution profession for completing the proceeding. He is from Ernest and Young. Tribunal gave an extension of 90 days to complete the CIRP. 

Status of the CIRP 

Haldiram Snacks was the sole bidder to acquire kwality (corporate debtor) which had been declared debt-ridden for a total amount of Rs 1,900 crore. It gave a bid of Rs 142 crore; however, the lenders of the Corporate debtor rejected the bid. Only 40% of the lender accepted the 142-crore plan against the minimum requirement of 66%. 

On the total offer of Rs. 141.59 crore that Haldiram made to acquire the debt-ridden Kwality, it reserved an amount of Rs. 135.64 for the financial creditors of the corporate debtor. 

After the rejection came, Haldiram Snacks has revised the offer and have come up with an offer of Rs 145 crore for acquiring the debt-ridden corporate debtor. It approached NCLT and requested that the revised plea should now be placed before the Committee of Creditors, and they should consider the revised offer. Additionally, they informed NCLT that this amount is higher than the liquidation value. 

NCLT even extended the period to complete the CIRP for a period of three-weeks and asked them to reconsider the offer.

The revised plan has increased the amount for Financial Creditors. On November 4, Haldiram wrote to the Insolvency Resolution professional mentioning their revised offer of Rs. 144.95, which is more than the liquidation value and of the total amount Rs 139 crore, is reserved for the financial creditors. 

Haldiram added that this revised plan would be much more beneficial for the financial creditors, and this value is more than they could have expected in the case where Kwality has undergone liquidation. 

It is expected that the lenders will approve the revised plan of Kwality as it is much more than any other process of releasing the money from debt-ridden Kwality limited. It is pertinent to note that Haldiram is a snack selling shop that sells through its outlet and from their other retail chain.