Kolkata: Arun Kumar Jagatramka, chairman and managing director of Gujarat NRE Coke Ltd, has moved the Kolkata bench of the National Company Law Tribunal (NCLT) proposing a new scheme for repaying creditors after an administrator failed to find takers for the metallurgical coke maker as a going concern, or a company in operation.
The tribunal had ordered the liquidation of Gujarat NRE Coke in January and had given the administrator appointed by it three months to find a buyer for it as an operating firm. In the interest of the company’s workers, the tribunal had asked the administrator, Sumit Binani, not to sell the company’s assets as scrap. Some 1,200 jobs are at stake. The company owes its creditors Rs4,600 crore.
Jagatramka’s latest plea is based on provisions in Sections 230-232 of the Companies Act, his legal counsel Moti Sagar Tiwari submitted at the tribunal on Monday. Jagatramka admitted he filed a fresh plea with the tribunal but declined to discuss details. Binani, who was tasked with finding a buyer, refused to comment.
Workers of another company faced with liquidation have also filed similar petitions, appealing to the tribunal not to order sale of its assets as scrap. Employees of Ferro Alloys Corp. Ltd filed two separate petitions with the Kolkata bench of tribunal, claiming that some 5,000 jobs are going to be lost if the company is ordered to be liquidated.
The row over Ferro Alloys is to be heard on Wednesday. Fearing an order for liquidation of the firm, employees in their petition have said that the delinquent company was looking to settle its dues, and that more time should be given beyond he stipulated 270-day window for dispute resolution under the Insolvency and Bankruptcy Code.
Financial creditors of Ferro Alloys have claimed that the company owes them Rs710 crore. The company has offered to settle the dues for Rs530 crore if an out-of-court settlement is allowed by the tribunal, according to the petition filed by the employees, which was reviewed by Mint. In both cases, the management has cited workers’ interests to stall liquidation of their firms.
“I am of the view that if any delinquent company is to be kept in operation, it should be put under the management of a professional administrator, replacing the current management," said Roopen Roy, former managing director of Deloitte Consulting India Pvt. Ltd, who now runs his own consultancy, Sumantrana Llp. The administrator should run the company until it can be sold as a going concern or other means of extracting value are found, he added.
“In these two cases, the ball is in the court of the secured creditors to decide if they are going to take a massive haircut and let the companies run," said a top lawyer in Kolkata, who asked not to be identified.
If the liquidation value is found to be a pittance, questions are going to be asked why loans were given to these firms in the first place, he said, adding that proper investigation should be ordered if diversion of funds is suspected.