Lakshmi Precision Screws Ltd is moving towards liquidation as creditors approved the move. The NCLT is expected to decide on the liquidation application soon. The company faces governance issues and regulatory non-compliance.
Lakshmi Precision Screws Faces Liquidation
Lakshmi Precision Screws Ltd is now officially moving towards liquidation after the Committee of Creditors (CoC) approved the process. A formal application has been filed with the National Company Law Tribunal (NCLT) Chandigarh Bench, awaiting adjudication.
What Just Happened
The company is undergoing Corporate Insolvency Resolution Process (CIRP) since July 18, 2018, under the Insolvency and Bankruptcy Code (IBC). The CoC's approval for liquidation signifies a move beyond resolution attempts. The NCLT order on July 18, 2018, initiated the CIRP.
Why This Matters
This development confirms the company's deep financial distress. With liquidation approved by creditors, the primary focus is now on the NCLT's final decision. Investors should be aware of ongoing governance friction and regulatory non-compliance issues.
The Backstory
Lakshmi Precision Screws has been under CIRP since July 2018. The IBC Code suspends the powers of the Board of Directors, with a Resolution Professional (RP) currently managing affairs.
What Changes Now
The approved liquidation means the company's assets will likely be sold to repay creditors. The NCLT's final order will formalize this process. The Resolution Professional, Deepak Thukral, continues to manage the process.
Risks to Watch
Significant governance friction exists, with the RP filing an application against the company's directors for non-cooperation. Additionally, the company has failed to submit required SEBI disclosures due to operational constraints from CIRP.
Peer Comparison
Companies undergoing CIRP typically face significant valuation discounts compared to peers with stable operations. The market often prices in the uncertainty and potential loss of value during insolvency proceedings.
Context Metrics
The company has been in CIRP for over five years, since July 18, 2018.
What to Track Next
Investors should closely monitor the NCLT's adjudication of the liquidation application and any further updates on the sale of assets and distribution to creditors.