Binani Cement’s operational creditors, who moved the Supreme Court in April challenging various sections of the Insolvency and Bankruptcy Code (IBC) to claim parity with financial creditors, are now optimistic about recovering all dues.
This follows the apex court clubbing this plea along with a petition by Sanjay Singal, chairman and managing director of Bhushan Power
& Steel, who claimed certain sections of the IBC were ultra vires of certain parts of the Constitution.
Although the two pleas are different, people with knowledge of the matter said they both point towards the legality of certain provisions in IBC, where a relook is needed if they violate provisions under the Constitution — a call only the Supreme Court can take. Hitesh Bindal, a representative of the forum that comprises operational creditors (OCs) of Binani, said the discrimination the IBC has made between OCs and financial creditors was unjustified and interests of OCs needs to be treated at par.
“Since 2013, the Binani Cement
plant could be kept operational only because of the operational creditors who did not pull out assistance, unlike the financial creditors,” said Bindal. According to Bindal, owner of Swastik Coal Corporation, whose claim is to the tune of Rs 885.9 million, banks and other financial institutions had stopped providing assistance to Binani since 2013, fearing exposure of the lenders could turn into a non-performing asset.
However, operational creditors extended their lines of credit by raw material supplies, services and others, keeping the plant running. It is primarily on account of this reason that the OCs of Binani are claiming parity with financial lenders.