NCLT approves Universal Processors' Rs 16.84 crore resolution plan for IRAA Clothing

The National Company Law Tribunal's Mumbai bench has approved a resolution plan for IRAA Clothing Private Limited submitted by Universal Processors. In an order pronounced on 27 October 2026, the tribunal approved the plan, which has a total value of Rs 16.84 crore including insolvency costs, payable within 60 days of the date it takes effect. The company's lenders had earlier voted to liquidate it.

What Happened

IRAA Clothing was admitted into the corporate insolvency resolution process, the tribunal-supervised rescue process for companies that default, on 25 August 2023, on a petition by an operational creditor, Rajat Textiles. Union Bank of India was the sole financial creditor, with an admitted claim of Rs 20.58 crore. It assigned the debt to Prudent ARC Limited on 30 March 2026.

According to the order, Universal Processors was the only bidder in 2024, and the committee of creditors rejected its plan and resolved to liquidate the company. The liquidation application was later kept in abeyance for 90 days after the bidder sought to submit an improved plan. A fresh valuation as on 7 April 2026 put the company's fair value at Rs 17.44 crore and its liquidation value at Rs 13.34 crore. The improved plan was approved with 100% of the vote, and the bidder furnished a performance guarantee of Rs 1.70 crore.

The tribunal held that the plan meets the requirements of the Insolvency and Bankruptcy Code. It recorded that the bidder has undertaken to pay provident fund dues of Rs 12.49 lakh, the amount admitted by the resolution professional, to the Employees' Provident Fund Organisation. The tribunal refused other reliefs sought in the plan, including exemption from stamp duty and registration charges.

What It Means

The plan takes effect from the date of the order and binds the company, its employees, creditors and government authorities. Claims not covered by the plan stand extinguished, and the moratorium on legal action against the company ends. The order says any pending applications on preferential or fraudulent transactions under the Code will be pursued by the company at its own cost, with recoveries going to financial creditors. If the bidder fails to implement the plan, the performance security will be forfeited. The order may be appealed to the National Company Law Appellate Tribunal.

Source: NCLT order