Gujarat NRE Coke founder likely to challenge NCLT’s liquidation order
Kolkata: Arun Kumar Jagatramka, the founder of Gujarat NRE Coke Ltd, is likely to challenge the verdict of the Kolkata bench of National Company Law Tribunal (NCLT), ordering the firm to be liquidated.
The verdict passed by the NCLT last week is “absurd”, said L.P. Tiwari, Jagatramka’s legal counsel, adding that the promoters of the company are likely to move the appellate tribunal, challenging it.
Sumit Binani, the professional appointed by the NCLT to manage the insolvency resolution, said he will try to implement the order and that if he is unable to do so, he will seek further directions from the bench.
The beleaguered metallurgical coke producer owes around Rs4,600 crore. It voluntarily moved the NCLT last year, declaring itself bankrupt and seeking insolvency resolution under the newly promulgated Insolvency and Bankruptcy Code. Its petition was admitted in early April.
Initially, Jagatramka himself had planned to present a resolution plan, but was barred from doing so by an amendment to the code passed in November. Thereafter, Rare Asset Reconstruction Pvt. Ltd, an Ahmedabad-based firm, submitted a bid for Gujarat NRE Coke but a majority of its creditors rejected it.
Last week, NCLT ordered liquidation of the company after Binani submitted that there was no resolution plan on the table even at the end of the stipulated 270-day period.
Some 1,200 permanent jobs are at stake. The employees came together and proposed a resolution plan at the end of December, but it was too late by then to even consider it—the deadline of 270 days is sacrosanct and could not be extended beyond 1 January.
While appointing Binani as the official liquidator, NCLT ordered Gujarat NRE Coke to be liquidated as a “going concern”—or a business in operation to make sure that jobs are not lost. The employees had submitted that the company had turned around and that it had made an operating profit of Rs4.46 crore and Rs2.14 crore, respectively, in October and November.
While giving the liquidator three months to dispose of the company as a going concern, the NCLT said the reserve price for the sale should not be less than the total outstanding debt and accrued interest—not less than Rs4,600 crore. If the plan failed, the liquidator was ordered to sell the assets in any manner that would fetch the best price.
It is impossible to find a taker at this price immediately, said a key Gujarat NRE Coke official, who asked not to be identified. At the same time, liquidation is not an optimal solution, either for the creditors or for the workers, this person added.
Anil Kumar Bhandari, managing director of Rare Asset Reconstruction, had earlier said the liquidation value of Gujarat NRE Coke was assessed at Rs360 crore, and that his bid was “substantially higher”.
According to the Gujarat NRE Coke official cited above, Bhandari’s firm had offered around Rs420 crore for the company’s assets. Bhandari himself, however, declined to name a figure.