Out-of-court settlement: Binani Industries looks to clinch the deal before April 9

By: and |
Mumbai | Published: April 6, 2018 4:31:49 AM

Binani Industries, which has been pushing for an out-of-court settlement for Binani Cement, is expected to submit a revised resolution plan to Binani Cement’s committee of creditors (CoC).

Binani Industries, binani cement, Out of court settlement, committee of creditorsBinani Industries, which has been pushing for an out-of-court settlement for Binani Cement, is expected to submit a revised resolution plan to Binani Cement’s committee of creditors (CoC).

Binani Industries, which has been pushing for an out-of-court settlement for Binani Cement, is expected to submit a revised resolution plan to Binani Cement’s committee of creditors (CoC) on Friday to win its approval for an out-of-tribunal settlement, sources with direct knowledge of the development told FE. This even as the tussle over Binani Cement heats up ahead of the next hearing on its insolvency resolution on April 9, when Dalmia Bharat is expected to push for its proposal to be accepted. “The CoC has asked for certain clarifications, and Binani Industries is working on the response. If it is done by today evening, the revised resolution plan will be sent to the CoC today; otherwise, it will be submitted tomorrow,” one of the sources mentioned above said on condition of anonymity. “Only if Binani can get the IBC (Insolvency and Bankruptcy Code) proceeding terminated does UltraTech’s deal with them stand. However, there is no revision in the amount of money that will be paid for the transaction. If Binani is saying that they will pay the full amount (to lenders), what is the justification for asking for more money,” a source close to UltraTech Cement said. However, a lender said Binani Industries has agreed to pay around Rs 8,000 crore to clear dues of not just the lenders but also of all operational creditors (that have been admitted under the insolvency process), which is higher than the  Rs 7,266 crore it is expected to receive from UltraTech as part of its arrangement. “As the borrower is coming to settle, there cannot be any haircut. Total dues has been worked out to around  Rs 8,000 crore. We have asked for a cash deposit of `750 crore (from Binani Industries), and a bank guarantee for the balance amount of about `7,300 crore,” the lender added.

Sources also said that Binani Industries has also accepted about 90% of the other conditions listed by lenders, including around indemnity from legal challenges. In a parallel development, the National Company Law Appellate Tribunal (NCLAT), legal sources said, has asked the National Company Law Tribunal (NCLT), Kolkata, to proceed keeping in mind the mandate of Sections 30 and 31 of the IBC — which spell out the steps to be followed in the resolution process. It said that the adjudicating authority should be unaffected by its order dated March 27 and the appellate authority’s order dated April 3. Interpreting this, Mahendra Singhi, CEO, Dalmia Bharat argued that this meant that “no proposal other than the resolution proposal that has been submitted by the RP (resolution professional) should be considered by the NCLT”. FE could not review a copy of the order, as it had not been uploaded till the time of going to press. The Kolkata bench of the NCLT had said that the decision to go ahead with an out-of-tribunal settlement would lie with Binani Cement’s CoC. It had asked the lenders of Binani Cement to consider an out-of-tribunal settlement within the deadline of April 9. However, the lenders have so far not made clear their decision on the matter, which it is now expected will be disclosed only after Binani Industries’ revised proposal for settlement is reviewed.

“They (the lenders) have been given a mandate, which is to say whether the out-of-court proposal is acceptable to them or not. I do not understand why they are not being able to fulfil that mandate. They are making a mockery of the process,” said a source close to UltraTech. Contesting this, a banker said, “Lenders have no power to approve this (out-of-tribunal settlement). So Binani will have to go to the appropriate authority, which is the Supreme Court. We have asked them to get approval from the Supreme Court.” Last month, Binani Industries had reached an in-principle understanding with the Aditya Birla Group-controlled UltraTech Cement that would allow the latter to buy Binani Industries’ 98.43% stake in Binani Cement for Rs 7,266 crore provided the resolution process under the IBC is terminated. The source close to Ultratech Cement said that UltraTech is likely to continue to pursue its plea at the NCLT that the CoC ought to have considered its revised resolution plan, and considered its bid as H1. The revised bid, which was submitted to the RP Vijaykumar V Iyer on March 8, was not considered by the CoC on its March 14 meeting, sources had said. On March 16, Dalmia Bharat had said the the resolution plan submitted by Dalmia Bharat controlled Rajputana Properties was approved by the CoC. “The CoC of Binani Cement has recommended the resolution plan to the NCLT for its requisite approval,” Dalmia Bharat said in a statement, adding that the resolution plan has received almost 100% approval of the CoC members. In FY2017, Binani Cement had posted a net loss of Rs 348 crore on revenues of Rs 1,527 crore, according to data from Capitaline. As per details on Binani Cement’s website, financial creditors of the company had claimed Rs 6,470.26 crore, while the NCLT had admitted claims worth Rs 6469.36 crore. The creditors to Binani Cement include State Bank of India, IDBI Bank, Canara Bank, Bank of Baroda, Bank of India, Edelweiss Asset Reconstruction Company and others. The Kolkata Bench of the NCLT had admitted an insolvency petition against Binani Cement On July 25, 2017. Bank of Baroda had referred the company to the bankruptcy court.

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