The National Company Law Tribunal’s various branches are monitoring several hundred cases of stressed assets. In the second of a series of weekly round-ups on the insolvency cases, we check the status of the top cases that made news this week.
On the top of the list is Bhushan Steel Ltd. The debt-laden company has finally been acquired by Tata Steel Ltd. In the case of Binani Cement, the resolution process is entering its final leg. In the case of Jaiprakash Associates and Tecpro, the drama is still unfolding as new allegations of fraudulent activities emerge. Read on to know more:
Bhushan Steel
On Friday, Tata Steel said in a stock-exchange filing that it had completed the acquisition of Bhushan Steel after receiving all necessary approvals.
This came after the Kolkata bench of the NCLT this week finally approved Tata Steel’s resolution plan for Bhushan Steel, moving aside a plea filed by the latter’s employees contesting the bid.
Bhushan Steel owed over Rs 50,000 crore to creditors. In March, with its Rs 35,200 crore resolution plan, Tata Steel was announced as the winning applicant to take over Bhushan Steel.
Subsequently, the UK-based Liberty House contested the rejection of its late bid and managed to get an NCLT order asking Bhushan Steel’s lenders to review its bid. This had prompted the Tata group company to approach the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT order. The NCLAT will hear Tata Steel's petition next week.
Reliance Communications
The NCLT’s Mumbai branch on Tuesday had admitted an insolvency plea by Sweden’s Ericsson against Anil Ambani-led Reliance Communications Ltd. However, RCom said on Friday it was in “advance discussions†with Ericsson for an out-of-court settlement to “resolve commercial issues†that will allow the company to skip the insolvency proceedings.
Ericsson has claimed Rs 1,155 crore from RCom and its two subsidiaries. RCom has been looking to sell assets to cut debt, which stands at over Rs 45,000 crore. “RCom is confident to expeditiously proceed with its monetisation plan with Reliance Jio and overall resolution plan with the lenders, keeping in mind the interests of all stakeholders,†the company said in a stock exchange filing on Friday.
Jaiprakash Associates
The Allahabad bench of the NCLT on Thursday ruled that Jaiprakash Associates Ltd had fraudulently used subsidiary Jaypee Infratech Ltd’s land parcels of over 750 acres to take on loans. The bench ordered release of the collateral that Jaiprakash Associates had used to secure loans from lenders including ICICI Bank and State Bank of India.
The bench ruled that the company had transferred ownership of Jaypee Infratech’s land to its own lenders during 2015-2017 “fraudulently†and that the company must return control of such land back to the subsidiary.
Jaypee Infratech has been undergoing bankruptcy resolution since August 2017. Last month, Lakshadweep Pvt. Ltd, a joint venture of Suraksha Asset Reconstruction Company and Mumbai-based Dosti Realty, emerged as the highest bidder for the company, but the offer was rejected by lenders.
The Delhi-based material handling firm may have to undergo fresh scrutiny. The resolution professional overseeing the case last week filed a complaint to the Delhi bench of the NCLT accusing Tecpro Systems Ltd’s promoters of siphoning off funds. In his complaint, a copy of which is seen by VCCircle, the resolution professional stated that irregularities from 2012 showed that the company’s business had been conducted in a fraudulent manner.
Separately, the company’s creditors have voted in favour of Kridhan Infrastructure Projects’ resolution plan for takeover of the company under the Insolvency and Bankruptcy Code (IBC). The second-highest bidder, US-based Eight Capital, is likely to raise its objection to the lenders’ vote in favour of Kridhan Infrastructure’s resolution plan based on certain “circumstantial evidence†that indicate violation of the IBC, according to people familiar with the matter.
The next hearing in the case is on 24 May at NCLT Delhi.
Binani Cement
In another twist to the insolvency proceedings of Binani Cement Ltd, parent Binani Industries Ltd in a petition at the NCLAT this week offered to clear creditors’ claims to exit the insolvency process. It has sought permission to pay the financial and operational creditors 100% of their claims within two weeks’ time. The creditors will have to reply to the petition by next week.
Binani Cement’s creditors are also reviewing revised resolution plans from bidders UltraTech Cement Ltd and Dalmia Bharat Ltd. Both UltraTech and Dalmia Bharat have been locked in a battle for takeover of debt-ridden Binani Cement since March.
UltraTech had proposed an out-of-court deal to Binani Industries in order to end the insolvency proceedings in exchange of settlement of creditors’ dues. Earlier this month, Dalmia Bharat had filed an appeal in the Supreme Court contesting UltraTech’s eligibility to bid.
The next hearing in the matter is at the NCLAT on 22 May.
