Edelweiss ARC complains against IRP in Synergies Dooray case
Mumbai: Edelweiss Asset Reconstruction Co. Ltd has filed a complaint at the Insolvency and Bankruptcy Board of India against resolution professional Mamta Binani in the case of Synergies Dooray Automotive Ltd, alleging she conducted herself in a partisan manner and acted without taking approval from the committee of creditors.
Binani has refuted these allegations saying the resolution happened with the approval of the National Company Law Tribunal (NCLT), which had heard and set aside Edelweiss’s objections. Synergies Dooray is the first case to be resolved under the new Insolvency and Bankruptcy Code.
According to Edelweiss’s complaint letter, a copy of which was reviewed by Mint, Binani refused to investigate allegations of fraud perpetrated at Synergy Dooray.
She also did not seek expert legal advice and obtain clarity on her role as the insolvency resolution professional, the letter said.
The resolution plan for Synergies Dooray involved merging the company with Synergies Castings Ltd, a creditor and related party.
Synergies Casting, which had held 75% of debt of the defaulter, transferred a significant chunk of loans to a non-related party called Millennium Finance Ltd.
This, according to Edelweiss, enabled Synergies Castings to put in place a proxy in the committee of creditors and diluted Edelweiss’s voting share.
This transfer of debt is illegal, Edelweiss contended.
According to the Insolvency and Bankruptcy Code, related parties have no voting rights in the committee of creditors.
Edelweiss holds Rs88.92 crore worth of debt in Synergies Dooray, Millennium Finance Rs749.63 crore, Synergies Casting holds Rs102.95 crore and Alchemist ARC holds Rs122 crore.
Edelweiss also alleged that Binani only considered the resolution plan submitted by Synergies Casting, which is a related party, and did not consider suggestions it had made to improve the resolution plan.
The asset reconstruction company also alleged that Binani did not take the committee of creditors’ approval while appointing the investment banker or even while seeking resolution plans from the public.
To be sure, Edelweiss had raised these objections in the Hyderabad NCLT against Millennium Finance being included in the committee of creditors. NCLT, however, dismissed the objection and said the interim resolution professional, under the provisions of the bankruptcy code, does not have the power to address disputes among creditors.
“The resolution plan was drafted under the provisions laid down in the IBC. The entire process was subject to the jurisdiction of NCLT and the process was overseen by the Tribunal. The creditor (Edelweiss) had raised concerns during the 180 days of resolution process and those were addressed and set aside by the National Company Law Tribunal,” said Binani.
Edelweiss has filed an appeal in the NCLAT on 8 September against the resolution plan approved by NCLT.