Winsome Yarns Limited, a company undergoing Corporate Insolvency Resolution Process (CIRP), is now under intense scrutiny following the findings of a Transaction Review Audit. According to an official disclosure to stock exchanges on 21st May 2025, the Resolution Professional has confirmed that various financial transactions worth ₹9.91 crore were executed in violation of provisions under the Insolvency and Bankruptcy Code, 2016 (IBC).

The audit, covering the period from 22nd December 2020 to 22nd December 2022, revealed questionable dealings involving related parties under the following sections of the IBC:

• Section 43 (Preferential Transactions) involving ₹37.68 lakh

• Section 45 (Undervalued Transactions) amounting to ₹9.04 crore

• Section 66 (Fraudulent and Wrongful Trading) totaling ₹49.73 lakh

These findings prompted the Resolution Professional (RP) to file applications under all three sections before the Hon’ble National Company Law Tribunal (NCLT), Chandigarh Bench seeking reversal and recovery of the identified transactions.

The findings have been disclosed in compliance with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, specifically Clause 17 of Part A of Schedule III, along with the latest SEBI circular dated 11th November 2024 addressing disclosure norms for fraud or default by promoters, key managerial personnel, or the listed entity.

Names of Individuals Involved

The report names seven individuals from the company's erstwhile management, including:

1. Manish Bagrodia

2. Prene Dsouza

3. Tilak Raj Dembla

4. Mridula Goyal

5. Rajiv Chadha

6. Anupma Kashyap

7. Pankaj Mahajan

These persons are believed to have played varying roles in facilitating the preferential, undervalued, and fraudulent transactions under review.

However, it is important to note that the suspended Board of Directors, which includes these individuals, has categorically denied the allegations presented in the audit findings. Their rebuttal has been noted but the matter remains sub judice.

Estimated Financial Impact

The estimated financial implication of these transactions is pegged at ₹9,91,41,776.84. However, the company has clarified that the actual financial impact will only be known after the final decision of the NCLT. Similarly, the actual amount involved in the alleged fraudulent transactions is also contingent on the tribunal's verdict.

This case adds another layer of complexity to Winsome Yarns’ ongoing insolvency proceedings. The company has already vacated its registered office in Chandigarh as of 30th December 2024, and is currently operating from its new premises in Mohali, Punjab.

Actions Taken

In line with the statutory process, the Resolution Professional has submitted the necessary filings under Sections 43, 45, and 66 with the NCLT. These applications seek:

• Reversal of preferential and undervalued transactions

• Accountability of the individuals involved

• Financial restitution to the corporate debtor

The company has stated that it will continue to provide updates as and when there are significant developments in the tribunal proceedings.

Compliance and Disclosures

The company has followed the compliance roadmap laid down by SEBI and IBC, and the disclosure was officially submitted to both BSE Limited (Scrip Code: 514348) and the National Stock Exchange (Symbol: WINSOME).

The letter was signed off by Rajpal S. Rathore, Senior Manager (Legal & Secretarial) for Winsome Yarns Limited (under CIRP), on behalf of the Resolution Professional. The disclosure includes all mandated details such as:

• Nature of fraud

• Timeframe

• Names of individuals

• Estimated amount involved

• Regulatory filings and applications submitted

What Lies Ahead?

As the NCLT proceedings unfold, stakeholders including shareholders, creditors, and regulators will be watching closely. The outcome of these cases could significantly affect the future of Winsome Yarns, including potential recovery for creditors or further erosion of asset value.

This situation also underscores the importance of robust internal governance, especially in financially distressed entities. The extensive role of the Resolution Professional and the transparency of disclosures will be critical in determining the credibility of the CIRP process in this case.

In the coming weeks, market participants can expect further updates as the NCLT begins to examine the applications, evaluate the evidence, and adjudicate on whether the transactions qualify as avoidable under IBC law. A favorable judgment for the RP could lead to substantial recovery, while an adverse one might complicate the company’s resolution process even further.

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