Ferro Alloys case: RP gets more time for resolution plan

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Kolkata | Published: April 3, 2018 4:07:08 AM

The Kolkata bench of the National Company Law Tribunal (NCLT) on Monday directed the Resolution Professional (RP) in the case of Rural Electrification Corporation versus Ferro Alloys Corporation to continue to manage the affairs of the corporate debtor, Ferro Alloys, with the RP rejecting all the five resolution plans at the end of the 270th day.

National Company Law Tribunal, nclt,Ferro Alloys caseNational Company Law Tribunal

The Kolkata bench of the National Company Law Tribunal (NCLT) on Monday directed the Resolution Professional (RP) in the case of Rural Electrification Corporation versus Ferro Alloys Corporation to continue to manage the affairs of the corporate debtor, Ferro Alloys, with the RP rejecting all the five resolution plans at the end of the 270th day.

The law allowed a maximum 270 days for resolution — an initial 180 days and 90 days of extra time on top of that. But additional 60 days were provided to the 12 companies declared bankrupt by the Reserve Bank of India, which were at various stages of the resolution process.

However, with the Committee of Creditors (CoC) rejecting all resolution plans for Ferro Alloys, the NCLT bench extended the timeline for submitting a resolution plan.

The CoC rejected the proposal of the highest bidder, IMR Mettalurgical Resources, a Swiss Company, on the ground that it was a partial bid with the company only wanting to take a part of the asset of the corporate debtor and refusing to take the management at all. Indian Metals & Ferro Alloys, the second highest bidder, who also gave a partial bid objected about the credibility of IMR Mettalurgical Resources.

KG Somani, the Resolution Professional for the case, said although the proposal of IMR covered the entire debt amount comprising a principle amount of Rs 510.97 crore and an interest amount of `218 crore, it didn’t want to take over the mines and management of Ferro Alloys, for which the CoC has considered it as a partial bid.

While REC is the sole corporate creditor, bidders for Ferro Alloys are IMR Mettalurgical Resources AG, Anik Industries Ltd, Indian Metals and Ferro Alloys Ltd, Synergy Steels Ltd and Krishnaping Alloy Ltd & Krishna Alloy Pvt Ltd.

REC is the financial creditor of FACOR Power Ltd and extended a loan of Rs 510.97 crore in 2009. Ferro Alloys became the corporate guarantor or the debtor and pledged 15.10 crore physical shares and 4 crore demat shares. With FACOR failing to repay debts, the financial creditor invoked corporate guarantee making the debtor liable to pay `728.97 crore. The guarantee agreement mentions in case of the corporate debtor failing to repay the creditor can realise the amount from the guaranteer directly.

Somani told FE, although IMR’s proposal covered the entire debt amount, it is being considered as a partial bid since with such a resolution package Ferro Alloy would be left with 4 mines, two of which are operational, 1 closed down and 1 applied for renewal of lease and a management without assets. “ We are for a complete takeover of the business and not the assets partially,” Somani said.

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