Court asks the Resolution Professional if he can consider the Binani proposal of repaying creditors by April 10
In a surprise move, the Kolkata bench of the National Company Law Tribunal (NCLT) put the ball into the lenders’ court by suggesting an out-of-court settlement to decide on the sale of Binani Cement.
The case reached the court after UltraTech, the second-highest bidder, offered a letter of comfort to the promoters of Binani Industries (parent company of Binani Cement), saying it will buy out the asset for Rs 7,200 crore, settling the dues of all creditors.
The court also asked the Resolution Professional (RP) if he can consider the Binani Industries's proposal of paying off all the creditors by April 10. The judge said that once the NCLT proceedings start, then only Supreme Court can grant permission to settle all the dues outside the Insolvency and Bankruptcy Code. In the meantime, the court requested both the RP and the lenders to consider an out-of-court settlement. The court, which will take up the matter next on April 2, said, “this is not an order only a suggestion”.
A senior banker said, "It is a very rare case where lenders are getting back all their money. But we need to study the directions of the court carefully as it should not subvert the IBC procedures. If we allow this, then there would be multiple cases where the bids would be revised by bidders.”
The NCLT court hearing was triggered by UltraTech which had approached the court, saying they have provided a letter of comfort to the promoters of Binani Cement to buy out the assets for Rs 7,200 crore. UltraTech raised its bid by close to Rs 1,066 crore. The offer was emailed to the RP.
Binani Industries argued that Dalmia Bharat-led consortium is trying to buy assets at a low value and that the tribunal can allow Binani Industries termination application by exercising inherent power. However, the court said that only the Supreme Court can decide on this.
The matters got further complicated with State Bank of India, Hong Kong branch, approaching the NCLT seeking payment of their dues of Rs 40 crore for corporate guarantees extended by them and Exim Bank, which sought repayment of its unsecured loan of Rs 620 crore.
The court said that no direction is being given at this stage and it is open to the committee of creditors to consider the Binani proposal.
The dispute arose when the letter of comfort was handed out by UltraTech after it lost out to rival, Dalmia led consortium, in a bidding process under IBC 2016.
UltraTech had put in a bid of Rs 6,200 crore, which it improved by Rs 1,066 crore after the bidder was selected. The company contested saying it wasn't a transparent process.
The move comes after Dalmia Cement announced last week that it's Rs 6,350 crore bid to buy Binani Cements has been accepted by the lenders. Besides offering Rs 6,350 crore, Dalmia had also offered a 20% equity in Binani to the lenders. Lenders were planning to monetise the stake if the bid got accepted by NCLT.
TEST CASE FOR IBC
- A senior banker said lenders need to study the directions of the court carefully as it should not subvert the IBC procedures
- The court said that no direction is being given at this stage and it is open to the CoC to consider the Binani proposal.
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