The bankruptcy court in Mumbai has admitted Oban Fashions Pvt Ltd, a wholly-owned subsidiary of listed Knitwear brands Rupa & Co Ltd under the Corporate Insolvency Resolution Process (CIRP) in an application filed by its operational creditor Sunrise Knitting Mills Pvt Ltd.
The Mumbai bench of the National Company Law Tribunal (NCLT) admitted the company and appointed Sanjay Ramdas Mahajan as an Interim Resolution Professional (IRP). During 2016 and 17, Oban Fashions entered into licensing agreements with international fashion brands such as FCUK and Fruit of the Loom to market and distribute these brands in India.
“The debt so owed by the corporate debtor (Oban Fashions) to the operational creditor (Sunrise Knitting Mills) against the supply of garments falls within the definition of ‘operational debt’ under Section 5(21) of the IBC,” observed the division bench of judicial member KR Saji Kumar and a technical member Sanjiv Dutt in its order of January 7.
“Hence, we find that the operational creditor has been able to substantiate the existence of an operational debt above the threshold limit prescribed under the Code due and payable by the corporate debtor which remained unpaid,” observed the bench while admitting the company.
Before the tribunal’s order, Sunrise Knitting Mills through its counsel Rohan Rajadhyaksha argued that, in 2019, it had supplied certain goods to Oban Fashions, however, the company failed to make payment.
“The corporate debtor (Oban Fashions) never denied or raised any objection as to the quality of the goods supplied and assured payment of dues by seeking further time,” argued Sunrise Knitting Mills through its counsel.
The operational creditor had filed the case after the company failed to pay its dues of about Rs 1.57 crore.
Countering this, Oban Fashions, through its counsels Shyam Kapadia and Amogh Joshi argued that the application fails to disclose how the operational creditor has calculated the date of default. “There is no basis or calculation to show the date of default in the absence of a written contract between the parties,” argued the company.
“The management (of Oban Fashions) has the option to challenge the order before the appellate tribunal (NCLAT) or it can settle the dispute with the operational creditor before the formation of the Committee of Creditors (CoC),” said Ashish Pyasi, Partner at law firm Aendri Legal.
During FY24, Oban Fashion’s revenue was Rs 21.55 crore, a decline from Rs 23.68 crore, during the previous year. Net Profit during the year was Rs38.33 lakh, as compared to Rs34.70 lakh, during the previous year.
