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BIFR for show-cause to wind up Midwest Iron

Richa Mishra

NEW DELHI, July 15

THE Board for Industrial and Financial Reconstruction (BIFR) has directed for issuance of a show-cause notice (SCN) for winding up Midwest Iron & Steel Co. Ltd (MISCL).

Having heard the submissions, the Bench observed that the intending co-promoter, Mr P. Rangaraju, had indicated only in-principle interest in the company and a months time sought by him was long over.

Moreover, Mr Rangaraju has neither called the operating agency (OA) nor come up with any proposal whatsoever for the revival of the company, the Bench noted. There was also no indication of the sources of funds that he will be bringing for rehabilitating the company, it said.

The main promoter and managing director was reported to be in judicial custody, the reasons for which had not been communicated, the Bench noted. Further, chances of change of management have already been explored without any positive outcome.

According to the OA, the company was lying closed since December 1997 and as on date, no proposal for its rehabilitation was available. Despite seeking time repeatedly, the company had failed to come up with any proposal in association with a co-promoter , it said. Further, the co-promoter has neither submitted any proposal nor called on the OA for discussions. As such, they had no objection to the winding up of the company, the OA submitted.

In the circumstances, the Bench noted that despite having allowed enough time and opportunity to the company as well as having explored other avenues, it had not been possible to work out any acceptable revival scheme for the company which could have ena ble it to turn its networth positive within a reasonable time while discharging all its due financial obligations.

As such, the Bench formed the prima-facie opinion that it will be just if the sick company was wound up and directed issuance of an SCN.

Meanwhile, in case, some fully tied up proposal indicating clear means of finance was received by the OA in response to the SCN, even by the existing promoters or others, the same is to be considered by it and a report submitted to the Board, it said.

The Bench also allowed the request of the secured creditors to pursue their legal recourse against the company, in view of the present stage of the proceedings. ``They may also come prepared with their stand regarding sale of assets of the company,'' the Bench said.