The CoC of the beleaguered cement company approved Rajputana Properties’ Rs 6,600 crore resolution plan on March 14 following the Dalmia Bharat controlled company being declared as the H1 bidder on February 27.
The hearing of 14 applications in the resolution process of Binani Cement at National Company Law Tribunal (NCLT), Kolkata, concluded on Tuesday, and the order is expected in about a week’s time. While much of the hearing on Tuesday was focused on the claims of operational creditors, who as per the resolution plan approved by the committee of creditors (CoC) will get only a part of their dues, the more significant matter is the consideration of UltraTech Cement’s revised bid for the beleaguered cement maker, a decision on which will set the direction for completion of the resolution process.
The CoC of the beleaguered cement company approved Rajputana Properties’ Rs 6,600 crore resolution plan on March 14 following the Dalmia Bharat controlled company being declared as the H1 bidder on February 27. The bench of justice Jinan Kr and Madan Gosavi on Tuesday asked the counsel for the resolution professional (RP) why the enhanced bid of UltraTech was not taken into consideration and why the company was not given notice of the CoC meeting on March 14.
To this the RP replied that the terms were set in the process document by the CoC and it is “binding upon the RP and all resolution applicants”. Arguing on the subject, CoC counsel Pratap Chatterjee maintained that the enhanced bid was beyond time, and time had to be considered to maintain certainty of law. He said that the CoC had laid down the terms of the process document and it was prevented to invite the H2 bidder, UltraTech, by its own rules.
“Rules were laid down first and the CoC cannot change the rules set by itself,” Chatterjee said, adding that a public notice was “issued mentioning a specified time frame and we have to stick to the public notice withstanding all internal changes.”
Earlier on Monday, UltraTech counsel Sidharth Mitra argued that they submitted their enhanced bid 40 days before the expiry of 270 days and they were told they would be called for the March 14 meeting.
Raising the case of the operational creditors, their counsel said that he had informed the resolution professional “even after the cut-off date, and as soon as UltraTech gave its revised offer, which we circulated among the operational creditors,” but the RP did not verify the applications of the claims and did not communicate anything about the status of the claims made. He said that the RP did not do an aggregation of claims made and didn’t call any representative of the operational creditors in any of the committee of creditors (CoC) meetings.
On this, Justice Jinan asked the counsel for the RP what prevented him from calling any representative of the operational creditors to the CoC meetings.
Avrajit Mitra, the counsel for the RP, replied that the claims of the operational creditors did not amount to even 10% of the total dues and hence there was no scope for calling the representatives of the operational creditors under the provisions of the Indian Bankruptcy Code (IBC).
Against the financial creditors’ dues Rs 6,470 crore, the claims of the operational creditors, including that of the statutory creditors Rs 1,073 crore, and of this only claims Rs 468 crore were admitted. So, the value did not amount to even 10% of the total debt, Mitra said adding that the resolution plan admitted 2,976 claims.
Dalmia Bharat’s counsel SK Kapoor made his submission that the resolution plan was made on the basis of three applications of the operational creditors and they were categorised into four groups. First, the 2,941 parties, each of whose due was within Rs 1 crore, aggregating to Rs 51.3 crore would be offered 100% of the verified amount. Second, 24 applicants with claims ranging between Rs 1-5 crore, aggregating Rs 64.8 crore, would get 40% of the verified amount. Third, five applicants with claims between Rs 5crore and 10 crore, aggregating to Rs 35.6 crore, are offered 25% of the verified amount. Fourth, six parties with claims more than Rs 10 crore, aggregating to Rs 300 crore would get 5% of their claims. Creditors in the last category “all have suspect transactions,” Kapoor said.
Financial creditor Exim Bank of India, an unsecured lender, has also alleged “material irregularity in following the process document laid down by the CoC”. The bank denying taking a 28% hair cut on Monday had asked for 100% of its total claim citing equal footing with the Bank of Baroda and SBI Bahrain. Both the banks are going to get 100% of their claims.
“Law doesn’t discriminate between secured and unsecured creditors and there cannot be discrimination among the two categories,” Krishna Raj Thakkar, counsel for EXIM Bank had argued.
The bench’s order on all the applications made will have far reaching implications, given that it will address the issue of revised bids being accepted under the resolution process, give direction on the claims of several classes of operational creditors and offer a perspective on the standing of secured versus unsecured creditors.