The attempt of Bharati Defence and Infrastructure (formerly Bharati Shipyard) to get registered as a sick company under the Board for Industrial & Financial Reconstruction (BIFR) has fallen flat on grounds of ‘malafide intention’.
Following rejection, the company recently approached the Appellate Authority for Industrial and Financial Reconstruction, sources told FE.
The company’s gross debt stood at Rs 5,255 crore, and in FY16, it reported a net loss of Rs 1,898 crore on revenues of Rs 58 crore.
The company is promoted by Prakash Chandra Kapoor (11.38%), Vijay Kumar (11.38%), Bharati Infratech Projects Private Limited (32%), Bharati Shipping and Dredging Company Private Limited (5.72%), Bharati Maritime Services Private Limited (4.35%).
According to the order dated July 11, the company had approached the BIFR with a malafide intention, “to avail undue protection u/s 22(1) of Sick Industrial Companies Act (SICA), 1985, and, thereby, to restrain its FI(s )/ Bank(s) and other secured & un-secured creditors for initiation of any recovery proceedings by them for recovery of their legitimate dues, and also to obtain reliefs/sacrifice from them on the plea of company’s revival”.
The order explained that the SICA is not applicable to industries related to ships and other vessels drawn by power. Although Section 1(5) of the Act also clarifies that the government in consultation with the Reserve Bank may allow the shipping industry protection under the BIFR, no such notification has so far been issued by the government.
It said that the company, in order to show to the public at large that it is no more in the exclusive business of shipping, shipbuilding, ship repairing and other related activities after submission of its application before the BIFR, changed its name to Bharati Defence and Infrastructure.
The corporate debt restructuring (CDR) package of Bharati Shipyard had failed in the first quarter of FY15, following which a consortium of lenders, led by State Bank of India, sold their loans to Edelweiss ARC in July.
Eleven lenders out of 23 had sold their debt amounting to Rs 4,200 crore.Bharati’s debt was referred to the CDR cell in December 2011 and lenders had agreed to recast the company’s loans in April 2012 and had offered them a moratorium on interest for 18 months and a reduced interest rate of 11%.Worried that its attempts to recover money from Bharti Shipyard may be jeopardised, Edelweiss Asset Reconstruction Company had in May last year appealed against a Bombay High Court ruling that allows bilateral settlements between the company and its unsecured creditors.
Nine unsecured lenders had filed separate winding up petitions against Bharti Shipyard and the court had directed the company to settle claims bilaterally.
In its order dated March 10, the court had observed that Bharti Shipyard had agreed to pay Rs 30.6 lakh to one of the petitioners and the later has agreed to accept the offer.
Misrepresentation of facts
-The company, to show that it is no more in the exclusive business of shipping and shipbuilding, changed its name to Bharati Defence and Infrastructure
-The CDR package of Bharati Shipyard had failed in the first quarter of FY15, following which a consortium of lenders sold their loans to Edelweiss ARC in July
-Gross debt stood at Rs 5,255 crore, and in the previous financial year, the company reported a net loss of Rs 1,898 crore on revenues of Rs 58 crore