Investors unlikely to get anything from Regent Textile liquidation

Publicly listed Regent Textile Mills Ltd, one of the 11 debt-ridden companies of the Chattogram-based Habib Group, is having to liquidate as the US business conglomerate Wilmington Trust Company filed an application against the company for being a guarantor of a substantial amount of dues.

Liquidation is the process of selling off assets and using the proceeds to pay off creditors and shareholders. It is triggered when a company is insolvent and is unable to pay its debts.

While creditors and lenders will be prioritised in the process, analysts warn that general investors (public) are unlikely to get anything from the liquidation.

Abu Ahmed, a stock market analyst and former professor of economics at Dhaka University, called such companies a burden for the stock market because they cause investors to suffer.

Regent Textile Mills Limited, which was established in 2006, is a 100% export-oriented textile mill for high-quality woven fabrics and home furnishing items located at Kalurghat, Chattogram. The Bangladesh Securities and Exchange Commission (BSEC) approved its IPO in August 2015 to raise Tk125 crore from the capital market.

BSEC Executive Director Mohammad Rezaul Karim said any liquidation will be governed by the Company Act and the BSEC will act after receiving directions from the court. 

The High Court has recently accepted the liquidation application in this regard, according to court officials.

The Habib Group's Regent Airways and ten other companies have also applied for liquidation due to non-payment of aircraft rentals owed to Wilmington Trust Company.

According to sources, Regent Airways had rented aircraft from Wilmington Trust Company on various occasions but had failed to make payments for a prolonged period, leading it to becoming a defaulter.

Also, ten other companies belonging to the Habib Group acted as guarantors for Regent Airways at the time of renting the aircraft from Wilmington Trust. The 11 companies applying for liquidation owe approximately Tk3,000 crore to banks, non-bank financial institutions, customs bonds, and other organisations.

While Wilmington Trust's lawyers have not disclosed the exact amount of their outstanding dues, they have conveyed the impression that it is quite significant. Regent Textile Mills Ltd could not recommend any dividend for its shareholders since 2021 and has also been unable to publish any disclosure from 30 June 2021.

As of 31 July 2022, the sponsors and directors jointly held 54.55% of the shares, institutions 4.69%, and the general public held 40.76% shares in the company.