Eastern Silk Industries Undergoes Resolution Following Insolvency Proceedings

Kolkata-based textile manufacturer Eastern Silk Industries Limited has been successfully resolved under the Insolvency and Bankruptcy Code (IBC), with a resolution plan approved by the National Company Law Tribunal (NCLT), Kolkata Bench on January 31, 2024. The company initially faced insolvency proceedings after an application was filed by Export-Import Bank of India in June 2022 due to unpaid dues of Rs 69 crore [1].

Resolution Plan Details

The approved resolution plan, amounting to Rs 61 crore, was submitted by Ajay Bikram Singh, owner of Austria-based textile company Baumann Dekor [1]. The Committee of Creditors (CoC) had previously approved the plan with an 88.30% vote share [1].

Under the plan:

• Secured creditors are to receive a total of Rs 58.2 crore against their admitted claims of Rs 894 crore [1].
• Workmen and employees are allocated dues of Rs 1.2 crore each [1].
• Government dues will also be paid at Rs 1.2 crore [1].
• Other operational creditors will receive Rs 12 lakh against their admitted claims of Rs 62 lakh [1].

Notably, the resolution plan did not include provisions for unsecured creditors, who had admitted claims totaling Rs 40.7 crore [1].

Company Background

Eastern Silk Industries Limited, established in 1946, is engaged in the spinning, weaving, furnishing, and manufacturing of textiles [1]. Prior to the insolvency proceedings, the company was promoted by Sudeep Shah and family, who collectively held approximately 51% of the company’s shares [1].

In its last reported financial year (2021-22), Eastern Silk Industries generated a revenue of Rs 73.14 crore, following Rs 90 crore in the previous year. The company reported a loss of Rs 6.86 crore in 2021-22, an improvement from the Rs 10 crore loss recorded in the prior year [1]. The company attributed decreased sales in 2021-22 to unfavorable market conditions and shifting customer preferences [1].

Share Capital Extinguished

As of January 31, 2024, the entire existing share capital of Eastern Silk Industries Limited has been extinguished, with recent share capital issued to Baumann Dekor Private Limited, the successful resolution applicant [2].