Committee of Creditors (CoC) of Gujarat NRE Coke (GNCL) will meet on December 4, after last week’s ordinance amending the Insolvency and Bankruptcy Code (IBC) made its promoters ineligible to bid for the company. Gujarat NRE Coke’s loans have remained non-performing for over a year, making its promoters ineligible under the revised IBC guidelines. The company owes lenders around Rs 4,600 crore and reported a net loss of Rs 676 crore on the back of Rs 541 crore in revenues in FY17. What makes matters worse for GNCL, the flagship company of Gujarat NRE group, is that no other applicant apart from its promoters has submitted a resolution plan so far. In April, the Kolkata bench of the National Company Law Tribunal (NCLT) had admitted the application by the city-based metallurgical coke producer under Section 10 of IBC. The next hearing is scheduled for December 14. Significantly, the moratorium of nine months for Gujarat NRE Coke will expire on January 1, 2018. The amendments to the IBC, 2016 through a recent ordinance has put safeguards in place by prohibiting ‘wilful defaulters’ from regaining control of the defaulting company or stressed assets through the backdoor in the garb of a ‘resolution applicant.’
The ordinance has also prohibited promoters of companies, which have been non-performing for one year or more, to bid during the resolution process. During the hearing on Tuesday, Sumit Binani, the resolution professional (RP) of the company, told a division bench of the tribunal that the company had proposed to submit a resolution plan for its revival and the CoC had appointed PWC to prepare it. “But now, because of the ordinance, promoters have become ineligible to submit the resolution plan,” Binani said. Speaking to FE, Gujarat NRE Coke chairman and managing director Arun Kumar Jagatramka said that in around 300 IBC cases there are no external interests and only their respective promoters have been trying to revive those companies.
“Ultimately the resolution plan was targeted towards the bankers. So, liquidation will not yield any value in this case and shareholders and bankers will lose money if the company is liquidated,” Jagatramka said. According to sources, JM Financial Asset Reconstruction Company was planning to buy out around Rs 3,500 crore loans from lenders, but it is understood that the asset reconstruction company (ARC) has not yet submitted any resolution plan. As per the present norms of the bankruptcy code, a company will be liquidated if no resolution plan is received during the stipulated time of 270 days. For GNCL, the 9-month deadline will expire on January 1.