The Supreme Court of India on Friday refused to allow out-of-court settlement in Binani Cement bankruptcy case, which otherwise could have set precedent for losing bidders to get back in the race.
The Supreme Court of India on Friday refused to allow out-of-court settlement in Binani Cement bankruptcy case, which otherwise could have set a precedent for losing bidders to get back in the race. Reuters quoting TV channel reports said that the apex court has refused out-of-court settlement in the case and now all stakeholders will go back to National Company Law Tribunal (NCLT) for the insolvency proceedings.
Binani Cement has a total liability of Rs 7,290 crore, underwent auction under the newly-constituted Insolvency and Bankruptcy Code, in which a consortium of Dalmia Bharat and Bain Piramal Resurgence Fund emerged a winner with a little margin. While Dalmia Bharat’s Rs 6,700 crore trumped Rs 6,200 crore offer by Ultratech Cement, the latter tried to gain the ownership of the company through an out-of-court settlement.
Ultratech Cement issued a Letter of Comfort of Rs 7,266 crore to Binani Cement’s parent company Binani Industries to buy 98% stake and sought to end the insolvency proceedings against it. Even as the stakeholders were given a chance to settle this tug of war out of court, the Committee of Creditors (CoC) for Binani Cement declined to accept the offer by Ultratech Cement due to lack of clarity in its legal interpretation, following which Binani Industries had moved the Supreme Court seeking end to insolvency proceedings.
Now the ball is back in NCLT’s court, which is likely to decide the winner under the IBC process where the Dalmia-led consortium emerged a winner. ICRA had earlier pointed out that the Binani Cement case raised questions on whether a resolution process can be concluded outside the purview of the resolution professional and committee of creditors, and whether a precedent is set for losing bidders to re-enter the bidding race.