Delhi HC grants stay on McLeod Russel’s tea estate sale

In an order that can throw a spanner in the works of tea company McLeod Russel’s debt restructuring, the Delhi High Court has issued an injunction against any asset sale or capital restructuring by the company.

The court,”in reference to a matter filed against certain promoters of the company with regard to certain alleged outstanding obligations owned by such promoters to the petitioner, has passed an ad-interim, ex-parte order of injunction by which, inter alia, the company has been restrained from selling, transferring, alienating, disposing, assigning, dealing, encumbering or creating third party rights on any of its assets, and carrying out any change in its capital structure, or any corporate or debt restructuring till the date of the next hearing in the matter,” the tea company said.

McLeod Russel added that it is taking action to have the injunction vacated.

The company is promoted by BM Khaitan Group, which also includes Eveready Industries.

Like Eveready, McLeod Russel also has considerable debts, and creditors to the tea company have in the past won injunctions against the company’s attempts to sell of some of its remaining tea estates.

The company had, three weeks ago, managed to get a stay order on the sale of its assets lifted by the Calcutta High Court.

That stay was imposed by a single judge bench of Calcutta High Court on the basis of a plea by IL&FS Financial Services Ltd, which had reportedly lent around Rs 120 crore to various companies of the BM Khaitan Group, especially Williamson Magor & Co Ltd.

This followed efforts by lenders to the company to effect a debt restructuring outside the scope of NCLT. The stay order had disrupted the plan. ICICI Bank, the lead lender to the company, mandated SBI Caps to carry out the restructuring.