While the National Company Law Appellate Tribunal (NCLAT) on Tuesday rejected Dalmia Bharat’s petition for a status quo on the resolution process for Binani Cement, the company is unlikely to raise the offer for the cement firm to better that by UltraTech Cement, sources close to the development told FE. “The company is expected to let the committee of creditors (CoC) know of its decision by 12 pm on Wednesday. However, the company will await the final order of the NCLAT and may approach the Supreme Court,” a source added.
The next meeting meeting of the CoC is expected to be either on Wednesday or Thursday. The Aditya Birla Group-controlled UltraTech Cement is understood to have offered Rs 7,960 crore for Binani Cement, which is around Rs 1,100 crore higher than what Dalmia Bharat has put on the table.
Binani Cement owes around Rs 6,500 crore to its financial creditors, according to claims admitted by the National Company Law Tribunal (NCLT).
When contacted, Dalmia Bharat’s spokesperson declined to comment on the matter.
The appellate tribunal also said that the aim of the Insolvency and Bankruptcy Code (IBC) is to maximise return on assets. It asked the resolution professional (RP) to continue with the resolution process, but added that the final outcome will be subject to its order. It asked both the resolution applicants to give written submissions on why they are eligible to bid for Binani Cement.
The NCLAT will now hear the matter on July 10, when it reconvenes after its summer break.
“The ball is now in Dalmia Bharat’s court. If they match the highest offer, they will get the first right of refusal,” a senior banker with direct knowledge of the development said. The CoC has given the company time till May 23 to match the highest offer.
The RP, with the CoC’s recommendation, will then place its favoured bid before the NCLT. “If the NCLT decides to go ahead with UltraTech’s bid without the NCLAT’s approval, the Dalmia Bharat-led consortium will challenge the decision and take it up before the NCLAT on July 10,” a source said.
Last week, Binani Industries, which holds a 98.4% stake in Binani Cement, moved the NCLAT, offering to clear all dues of all creditors within two weeks if Binani Cement was brought out of the purview of the corporate insolvency resolution process (CIRP). This is the second time Binani Industries has attempted to bring Binani Cement out of the purview of the IBC.
In April, it had moved the Supreme Court asking for Binani Cement to be withdrawn from the resolution process, but the apex court had noted that the IBC process should not be bypassed. Subsequently, Binani Industries withdrew its plea and the matter moved back to the NCLT.
Binani Industries had inked an in-principle understanding with UltraTech Cement where the latter would buy its stake in the cement maker for Rs 7,266 crore, provided the resolution process under the IBC was terminated.
Earlier this month, the NCLAT directed the RP not to decide on the eligibility of the bidders, but just to pass on the revised resolution plans in sealed covers to the CoC. It had also asked the CoC to furnish reasons for “approving one or the other resolution plan” to be submitted before the NCLT.
On May 2, the Kolkata bench of the NCLT asked the RP and CoC to consider the revised offer from UltraTech. It also offered Dalmia Bharat a chance to better its offer. Following the NCLT’s order, Dalmia Bharat moved the NCLAT against the NCLT’s order. However, the appellate tribunal refused to pass any interim stay order. Dalmia Bharat then moved the Supreme Court seeking a stay on the NCLAT’s order. The apex court rejected the plea.
NCLT Kolkata had admitted the insolvency petition against Binani Cement on July 25, 2017. Bank of Baroda had referred the company to the bankruptcy court.