By Shashank Dipankar
The Kolkata bench of the National Company Law Tribunal (NCLT) has approved Bhagwati Power and Steel’s (BPSL) resolution plan for debt-ridden Adhunik Alloys and Power under Section 31(1). On December 7, the tribunal ordered that the approved revival plan would come in force with immediate effect and the moratorium order passed under Section 14 would also cease. The insolvency petition was filed by State Bank of India (SBI) against Adhunik Alloys under Section 7 of the Insolvency and Bankruptcy Code (IBC) on August 23, 2017. Sumit Binani of SBAC and Associates, Kolkata, was appointed as interim resolution professional (IRP) by the tribunal.
The IRP had admitted claims worth Rs 757 crore from financial creditors, including Allahabad Bank, ICICI Bank, IFCI, Reliance Commercial Finance, Punjab National Bank (PNB) and Srei Infrastructure Finance. BPSL’s resolution was approved by the committee of creditors (CoC), with 77.20% of creditors voting in its favour. After a public invitation by the IRP for expressions of Interest (EoIs) from interested resolution applicants, four resolution plans were received from Edelweiss Asset Reconstruction Company (ARC), Orissa Metaliks (OMPL), BPSL and Srei Infrastructure Finance.
Initially, after each plan was scored and evaluated, BPSL had emerged as the highest bidder. However, after the ninth CoC meeting held on March 23, 2018, in the light of further clarifications received from applicants, the resolution plans were subjected to re-scoring, after which Srei emerged the highest scorer.
BPSL then filed an application before the tribunal seeking the acceptance of its resolution plan and including details about Srei’s purported ineligibility under Section 29A of the IBC. Srei, in turn, filed an application before the National Company Law Appellate Tribunal (NCLAT). The NCLAT in its clarification order stated that all resolution plans, including those of BPSL and Srei, which were in consonance with Section 30(2) of IBC, were required to be placed before the CoC, which would decide best resolution plan within 10 days of the order.
At its November 14 meeting, the CoC ultimately approved the restated final resolution plan of BPSL. The NCLT also set aside IFCI’s contention that the resolution plan selected by the CoC discriminated against it by applying the principles of liquidation to the corporate insolvency resolution process (CIRP). The objection was put down as IFCI was part of CoC when voting was being done for restated final resolution of BPSL and voted in favour of it.
Justice Jinan KR said: “The plan approved by CoC is fair, equitable and does not discriminate against the objectors. Under these circumstances, I do not find any justifiable reason to disturb the distribution methodology, the very basis used by the resolution applicant for payment of the upfront amount.”