The Kolkata bench of the National Company Law Tribunal (NCLT) on Thursday ordered liquidation proceedings against Gujarat NRE Coke (GNCL) as a ‘going concern’, as no resolution plan was approved by the creditors of the company during the stipulated time.
A division bench of the tribunal, comprising justices Vijai Pratap Singh and Jinan KR, ordered the commencement of liquidation proceedings with some conditions. “The liquidator shall try to dispose of the corporate debtor company as a going concern after publication of notice in newspaper with the reserve price which shall be equal to the total debt amount including interest and maximum period applicable for trying the sale of the corporate debtor as a going concern will be three months from the date of the order,” the bench said in the order. Sumit Binani, the resolution professional (RP) of the company, has been appointed as the liquidator.
The bench also said if the process of sale as a going concern fails during the three-month period, the process of sale of assets of the company will be according to the provisions for the same under Section 33, Chapter VI of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
Talking to FE after the tribunal’s order, MS Tiwari, the counsel for workers, said: “With the bench directing liquidation as a going concern basis within three months, it is a relief to workers for the time being.” Currently, GNCL has 1,178 employees and workers.
In April last year, the tribunal had admitted an application by the metallurgical coke producer, the flagship company of Gujarat NRE group, under Section 10 of the Insolvency and Bankruptcy Code (IBC) for commencing the insolvency resolution process. For the company, promoted by Arun Kumar Jagatramka, the moratorium of nine months for completion of the resolution process expired on January 1.
When contacted, Jagatramka, who is chairman and managing director of GNCL, declined to make any comment on the latest development. According to a disclosure to the stock exchanges, as on September 30, 2017, the promoter & promoter group held a 25.36% stake in the company.
On January 8, in his submission before the division bench of the tribunal, senior advocate Ratnanko Banerjee, representing the workers, had argued that under the provisions of the IBC, operations of the bankrupt firm could continue for the purpose of beneficial liquidation. “Carrying on the business will cause the maximum value during a possible liquidation and provide benefits to the workers,” Banerjee had said. Notably, the company’s employees moved the Supreme Court earlier this week for consideration of their resolution plan, so that the bankrupt company may continue to operate as a going concern, and so that they do not face any possible job losses. The apex court is likely to hear the petition filed by the workers of the company before it.
Appearing before the tribunal on January 1, Sumit Binani, the resolution professional (RP) appointed for the company, said, “As no resolution plan is approved within the insolvency resolution process, as per provisions of the Section 33 of the IBC the company will have to go into liquidation by an order of the NCLT.” Binani informed that he had not considered the resolution plan, submitted by the company’s workers to him on December 30, 2017, since the resolution process was due to expire on January 1 and he did not have sufficient time to examine the plan and place it before the committee of creditors (CoC) for approval.
As the company’s loans have remained non-performing for over a year, its promoters have become ineligible under the revised IBC guidelines to submit a resolution plan. GNCL owes lenders about Rs 4,600 crore.
The company’s financial creditors include SBI, BoB, Axis Bank, Standard Chartered Bank, ICICI Bank, Tamilnad Mercantile Bank and DBS Bank. SBI has the largest share among the creditors.
On Thursday, the scrip fell by 3.40% to end the day at `1.42 on the BSE. The NCLT order came after market hours.