NEW DELHI: The Supreme Court’s referral back to the National Company Law Tribunal in the closely contested Binani CementNSE 0.00 % resolution has come as a boost for the original winning bidders. They believe that this reference by the highest court in India has set the correct precedent for the still nascent Insolvency and Bankruptcy regime.
“What we understand is that the Supreme Court has said that there should not be any termination of the IBC process and there can’t be any outside settlement,” said an elated Mahendra Singhi, CEO of Dalmia BharatNSE 0.06 % Group.
The Supreme Court on Friday refused to allow an out-of-court settlement for the bankrupt cement firm sending the case back to the NCLT Kolkata. The promoters of Binani Cement are expected to fight the case afresh.
Singhi added that the Supreme Court is clear that the “IBC process has to be followed. The losing bidder can’t make any back door entry. Defaulting promoter barred under section 29A of the law can’t participate in any way.”
“Now based on observations from Supreme Court, no banker would think of an outside settlement,” he added.
The lawyers of the Binani Industries, earlier in the day, argued before the Supreme Court that there was no provision under the IBC that restricts it from paying off its debt at any stage. However the apex court found its petition premature after which the counsel, led by eminent lawyer Harish Salve, withdrew the plea that had sought termination of the Binani Cement’s insolvency proceedings.
With the matter now back with the Kolkata bench of National Company Law Tribunal (NCLT), and listed for April 16th, Singhi is confident their resolution plan filed with the tribunal is compliant with the entire IBC process. “We are clear that resolution process would be followed. On 16th, NCLT Kolkata will review the resolution plan and clear it,” he said.
Singhi was categorical that the Group at all points in time had the backing of all the creditors. “Earlier also when they (Committee of Creditors) had approved our plan. They had said we are with you, today also we feel they are with us. They were never there with Binani or UltraTechNSE -0.59 %.”
Poised to win the third distressed asset under the new IBC, after Murli Cement and Kalyanpur Cement, Singhi is happy with the way courts and resolution professional have gone about their business.
“We are happy that courts, creditors, resolution professional all playing their role. The IBC process has been able to motivate corporates like us to utilize the distressed assets,” he concluded.
The Dalmia Bharat Group in a consortium with Bain Capital had bid Rs 6,750 crore under the IBC framework. Once the Group was declared the winner by the Committee of Creditors, UltraTech Cement which was also in the running for the company under resolution upped its offer by close to Rs 700 crore.
When the UltraTech offer was rejected by the lenders, the Kumar Mangalam Birla-led company managed a side-deal with the promoters of Binani Cement.
In the offer, UltraTech Cement had proposed to buy Binani Industries’ 98.45% stake in its cement unit for Rs 7,266 crore, subject to the termination of its insolvency proceedings.
The Kumar Mangalam Birla-led firm had professed that it had the support from the Binani lenders, who at the insolvency process, had backed Dalmia Bharat’s Rs 6,500 crore offer.
The drama to the Supreme Court also follows the order from the National Company Law Appellate Tribunal (NCLAT) that had dismissed Binani Industries’ same termination petition. It gave it an option to go to Supreme Court under Article 142 saying that the resolution process should go on.
The Binani promoters, however, then took this deal to the Supreme Court with the rationale of maximum value realisation for the lenders combined with the interests of the unsecured lenders.
This side deal by the promoters came in for criticism because it seemed to be an attempt to sidestep the IBC process. UltraTech, according to the CoC, had lost the bid fair and square and hence was unwilling to reconsider its increased bid. The Supreme Court, it seems, has maintained the sanctity of the IBC process with its observation.
source : Times of India, April 13, 2018