The resolution professional (RP) for Binani Cement has rejected the claims of more than Rs 2,000 crore by IDBI Bank and the Hong Kong branch of State Bank of India, as the money was owed in corporate guarantees and not invoked before the insolvency proceedings had begun, sources told FE. According to sources, the RP, Vijaykumar V Iyer, has decided to revoke his earlier decision of allowing the claims. On the basis on this decision, the committee of creditors (CoC) of Binani Cement, a subsidiary of Binani Industries, will be reconstituted, sources said. “But the reconstitution of the CoC will not affect the validity of any of its earlier decisions,” he added. The last meeting of the CoC held on December 5. Emails sent to IDBI Bank and SBI did not elicit any response till the time of going to the press. Meanwhile, Edelweiss Asset Reconstruction Company (ARC), leader of the consortium after buying a large chunk of the debt from banks, had earlier urged the Kolkata bench of the National Company Law Tribunal (NCLT) to reject IDBI Bank’s claim to uninvoked corporate guarantees.
During the hearing on November 17, Edelweiss ARC’s counsel Sumant Batra contended before the division bench of the tribunal, comprising justices VP Singh and KR Jinan, that the settled position of the law was that as long as the corporate guarantee was not invoked, it does not become payable. Following that, the tribunal directed Iyer to decide on the objections raised by the ARC within two weeks. “Guided by an order of NCLT’s principal bench, Iyer decided to revoke his earlier decision of admitting the uninvoked claims,” the source said. In its order on October 27, NCLT’s principal bench had said in order to qualify as a ‘debt’, a corporate guarantee must be invoked and the date of invocation must be prior to the date of the insolvency commencement.
In July, the Kolkata bench of the NCLT had admitted an insolvency petition against Binani Cement by Bank of Baroda (BoB)
after the company failed to repay a sum of Rs 97 crore. The company owes a consortium of lenders close to Rs 3,042.93 crore. Binani Cement reported a net loss of Rs 289 crore in 2015-16 on Rs 1,524 crore in revenues, primarily owing to an interest outgo of Rs 368 crore. Meanwhile, IDBI Bank has moved the National Company Law Appellate Tribunal against the November 17 order of the Kolkata NCLT and also against NCLT principal bench’s order, sources said.