Kolkata: Lenders to Binani Cement Ltd have asked for time till 2 April to consider UltraTech Cement Ltd’s bid for the company outside the bankruptcy process.
On Tuesday, the Kolkata bench of the National Company Law Tribunal (NCLT) asked the lenders if they were willing to consider UltraTech’s proposal to buy a 98.43% stake in Binani Cement from its parent Binani Industries Ltd. Binani Cement is currently undergoing resolution under the insolvency and bankruptcy code (IBC).
The counsel for the lenders described the UltraTech deal as “excellent" and asked the NCLT for time till 2 April to decide whether to consider it. The tribunal will now hear the matter on 2 April.
Though he described the proposal as “excellent" and acknowledged that the deal could result in all creditors being repaid, the counsel for the lenders, Pratap Chatterjee, asked the Kolkata bench of the NCLT if there was any provision under IBC for an out-of-court settlement. Only the Supreme Court has the authority to terminate resolution proceedings, he said.
Chatterjee sought time saying the matter had to be discussed among 25 lenders.
The Braj Binani group had earlier prayed for suspension of the proceedings so that it could sell its stake in Binani Cement for Rs7,266 crore and repay creditors.
It has committed to pay off Binani Cement’s dues within two weeks if allowed to sell stake to UltraTech.
Dalmia Bharat Ltd, which had earlier been declared as the highest bidder for the assets of Binani Cement, has argued that allowing an out-of-court settlement at this stage will undermine the sanctity of the insolvency resolution process under IBC.
“If the process (of insolvency resolution) is seen as unclear or arbitrary...bona fide applicants will decline to spend time and money to submit bids," Dalmia Bharat has said in a petition.
After Dalmia Bharat offered Rs6,350 crore and was on 27 February declared the top bidder, UltraTech, one of the unsuccessful bidders, raised its offer substantially. Eventually, on 19 March it concluded a deal with Binani Industries for sale of 98.43% stake in the cement maker for Rs7,266 crore.
Even without rejecting UltraTech’s revised bid, Binani Cement’s committee of creditors approved a resolution plan with Dalmia Bharat as the highest bidder. Amid opposition from the Braj Binani group and UltraTech, the plan was earlier this month filed with the tribunal for its approval.
Though there is no provision under IBC to terminate the resolution process, the Supreme Court created a precedent last year. It allowed a Mumbai-based realtor and its lender to settle their dispute on mutual consent outside the framework of IBC.