Binani cement takeover squabble: Will it set precedent for losing bidders to win at last?

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Updated: Apr 10, 2018 6:17 PM

If you have lost track of what is happening in Binani cement's takeover case, then here's a recap that ends with a question: Will it set a precedent for losing bidders to win at last?

Binani Cement insolvency proceeding reaches Supreme CourtIf you have lost track of what is happening in Binani cement’s takeover case, then here’s a recap.

If you have lost track of what is happening in Binani Cement’s takeover case, then here’s a recap that ends with a question: Will this case be a watershed moment in IBC’s history and set a precedent for losing bidders to win at last?

To begin with, Binani Cement has a total liability of Rs 7,290 crore. Under the standard IBC law, a resolution professional (RP) was appointed to oversee the company’s insolvency procedure. Bids were conducted; and a consortium of Dalmia Bharat and Bain Piramal Resurgence Fund emerged winner with an offer of Rs 6,700 crore, trumping a Rs 6,200 crore offer by Ultratech Cement.

What led to a tug of war in this case is that UltraTech Cement cut a deal with Binani Cement’s parent company Binani Industries to buy 98% stake and sought to end the insolvency proceedings against it. UltraTech Cement offered to issue a comfort letter to provide Rs 7,266 crore to Binani Industries for doing so.

Now, Binani Industries has moved the Supreme Court asking to end the insolvency proceedings against Binani Cement even as its Committee of Creditors (CoC) have declined to accept Ultratech’s offer due to lack of clarity in its legal interpretation. Earlier, the Kolkata-bench of National Company Law Appellate Tribunal (NCLAT) had given time until April 9 for an out-of-court settlement in this case.

While all eyes are on the Supreme Court’s hearing scheduled on April 13, rating agency ICRA has said that this case has raised questions on whether a resolution process can be concluded outside the purview of the resolution professional and committee of creditors.

“It remains to be seen if this sets a precedent for losing bidders to re-enter the bidding race,” ICRA said, adding that a pressing need to minimize the legal tangles and plug the gaps in the interpretation of the IBC as it burdens the already over-flooded judiciary bodies.

Meanwhile, Dalmia Cement has made a strong case for its offer, stating that it will its side in the Supreme Court while warning CoC against considering Ultratech’s offer through Binani Industries.

 

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