UltraTech’s resolution plan is up for approval at the Kolkata NCLT. This is being opposed by Dalmia Bharat, primarily on ground of eligibility and flouting the IBC process. Dalmia Bharat
has also stated that in case the NCLT passes any verdict on this case without the approval of the NCLAT, it would move to the SC.
The series of petitions has been so long that even senior company executives have lost track. The SC had previously ordered the NCLAT
to hold daily hearings on this case.
Sources, both in the Dalmia Bharat
camp and those opposing its proposed takeover of Binani Cement, are of the view that a final outcome may come by the end of this month.
In nearly all previous instances, whenever the NCLT passed an interim order or a final order on the case, the aggrieved party moved the NCLAT
and, sometimes, even the SC. The SC has repeatedly disposed of the applications, asking the applicant to first seek help from the NCLAT.
As a result, sources say valuable time as well as money has been lost. UltraTech had to raise its offer of Rs 79.60 billion by another Rs 150 million to cover for the litigation cost of the committee of creditors (CoC), while the resolution cost, mired by complicated litigation, has exceeded Rs 1.3 billion.
“Valuable money, which could have bettered the cash flow and available cash at hand for both UltraTech and Dalmia Bharat, have been stuck with the lenders and a speedier resolution process can help free it up,” a source said.
After Dalmia Bharat
was selected as the H1 bidder, the CoC had issued it a letter of intent. In turn, this company deposited Rs 6.27 billion with the lenders. However, following the NCLT’s verdict in May, the CoC selected UltraTech Cement as the new H1 bidder. The Aditya Birla Group company also deposited Rs 6.52 billion as assurance for acceptance.
Besides, UltraTech had deposited Rs 7.5 billion with the lenders as bank guarantee, when it was financing the promoters for Binani Cement
for an out-of-court resolution. “Hence, this money is stuck at the lenders’ end and cannot be paid back to the depositors unless the resolution process ends,” the source added.
Earlier, sources opposing Dalmia Bharat’s proposed takeover of Binani Cement, had alleged that Dalmia Bharat was intentionally lengthening the final outcome with a complex series of litigations. In turn, Dalmia Bharat had refuted the allegation with a claim that it’s litigations follow the IBC process, under which it is the eligible H1 bidder.
Sources in Dalmia Bharat suggested that the NCLAT can now decide directly on two crucial petitions after which cases the matter can be escalated to the SC either by them or by UltraTech, depending on the outcome. “In the first place, the NCLAT will now directly decide if UltraTech’s offer is maintainable at all as its revised offer, which the CoC has now approved, came in after conclusion of bid submission. On the other hand, the contention over UltraTech’s eligibility under Section 29(A) of the IBC will also be decided now directly by NCLAT,” a source in Dalmia Bharat said.
The above stated section deals with various ineligibility parameters for resolution applicants. As per Section 29 (A) (c) of the IBC, any person or promoter who is managing a company classified as non-performing asset for a period of one year till commencement of insolvency proceedings stands disqualified. The provision mentions that any other person acting jointly or in concert with the ineligible resolution applicant also stands disqualified.
This point has been one of the strongest allegations put forward by Dalmia Bharat post NCLT’s verdict, which admitted UltraTech’s bid.
Dalmia Bharat had approached the Supreme Court over this allegation previously but was turned away after it referred the case to NCLAT. In turn, NCLAT had suggested that the CoC can take a call on UltraTech’s eligibility while considering its bid. However, it is subject to approval of the court.
The lenders have also breathed a sigh of relief as they expect “an early resolution process than anticipated before”. Some of the lenders have been impatient to recover their dues under the IBC process but a lengthy litigation process had denied them a faster recovery of their dues.
NCLT Kolkata admits Binani insolvency resolution case on July 25, 2017
CoC approves Dalmia Bharat as H1 bidder on March 15, 2018. UltraTech, Binani, operational creditors, SBI Hong Kong and Exim Bank move NCLT against Dalmia Bharat
On May 2, NCLT Kolkata asks CoC to consider UltraTech's plan. Dalmia Bharat moves NCLAT and SC against NCLT order
On July 2, SC orders transfer of all NCLT cases to NCLAT