Insolvency resolution: Binani's CoC vote on UltraTech offer on Monday

Even as the Dalmia Bharat-led consortium has moved the Supreme Court asking UltraTech Cement be disqualified to bid for the stressed assets of Binani Cement, the Rs 79.60 billion proposal will be put to vote on Monday by Binani Cement’s Committee of Creditors (CoC).

 

“The NCLT (National Company Law Tribunal) has to be apprised about its order on June 4 and by then we need to select the successful bidder and issue a Letter of Intent. Hence, despite Dalmia Bharat moving the Supreme Court, we will put UltraTech’s proposal to vote,” said one of the leading lenders to Binani Cement.

 

According to this lender, Dalmia Bharat’s claim that UltraTech is ineligible to vote under Section 29(A) was unsubstantiated, but the CoC would abide by the Supreme Court’s ruling on Dalmia Bharat’s allegation even if UltraTech’s proposal was passed at the scheduled meeting.

 

This lender has asked the members of the CoC to be physically present at the venue in Mumbai where the Aditya Birla Group company’s fate would be decided on Monday. “In case somebody isn’t able to be physically present, then e-voting will take place,” the lender said.

 

Sources said since UltraTech’s proposal took care of all the legitimate claims of all stakeholders involved in Binani Cement, and the financial lenders’ claim of interest would be paid “as-on-date”, it is likely that its proposal would be passed with an overwhelming majority.

 

This follows after the CoC gave time to Dalmia Bharat to match UltraTech’s offer according to the NCLT’s order, but Dalmia Bharat declined to up its offer of around Rs 66 billion. “According to the NCLT’s order, Dalmia Bharat is out of this race now,” a source opposing the takeover of Binani Cement by Dalmia Bharat said.

 

Asked about Dalmia Bharat’s allegation, lenders were of the opinion during the bidding process that UltraTech’s bid needn’t be disqualified; even the CoC at their last meeting had stated that UltraTech was eligible to bid.

 

Monday’s meeting would also decide on making Edelweiss ARC as the executor of the outcome of the CoC’s decision. Edelweiss’ exposure is nearly 70 per cent of the total claims of the financial creditors.

 

Earlier, after issuing a Letter of Intent to the Dalmia Bharat-led consortium after the bidding process, the CoC had approached the NCLT for approval of this resolution plan. In turn, UltraTech had challenged the resolution process and approached the same tribunal.

 

The NCLT’s final order has been in UltraTech’s favour which ordered the CoC to consider UltraTech’s plan and select the bidder keeping in mind the “spirit of IBC (Insolvency and Bankruptcy Code)”.

 

The tribunal had previously stated that the objective of the IBC was value maximisation. On the other hand, Dalmia Bharat sources said that in case the CoC approved UltraTech’s plan and the NCLT also gave the nod, it would move the National Company Law Appellate Tribunal against the action.

 

According to a source close to Dalmia Bharat, even if the lenders of Binani Cement and UltraTech signed a deal and if any cash transfer happened, the NCLAT had the power to reverse the process.

 

On the other hand, the NCLT has set June 24 as deadline for the resolution process, failing which Binani Cement will face liquidation according to the IBC.

 

But, lawyers involved in the case have suggested that an extension by the tribunal may be granted.