NCLT appoints administrator to take over Binani Cement
NCLT has rejected Binani Cement’s argument that Bank of Baroda’s application to initiate bankruptcy proceedings against it had technical flaws
Kolkata: The Kolkata bench of the National Company Law Tribunal (NCLT) on Tuesday ordered the appointment of an interim resolution professional, or administrator, to take control of the assets and operations of Binani Cement Ltd, based on a plea by Bank of Baroda, one of the company’s lenders.
The bench rejected Binani Cement’s argument that Bank of Baroda’s application had several technical flaws and that its claim of Rs97 crore was minuscule compared with the Braj Binani group’s total assets of Rs14,000 crore.
The bench on Tuesday ordered the appointment of Vijaykumar Iyer, partner at Deloitte Touche Tohmatsu India Llp, as interim resolution professional for Binani Cement. It also asked Iyer to convene a meeting of the so-called committee of creditors and inform the bench about the resolution passed by it.
It was not immediately clear if the company would challenge the NCLT order which effectively supersedes its board. Binani Cement counsel Pratap Chatterjee was not available for comment.
Chatterjee had submitted to the bench on 12 July that Bank of Baroda was not the lead lender to Binani Cement and that it had unilaterally moved NCLT without the consent of the joint forum of lenders, in breach of Reserve Bank of India (RBI) regulations.
However, counsel for Bank of Baroda Rishav Banerjee challenged Chatterjee’s claim saying his client had the backing of the lenders’ forum led by Edelweiss Group. Banerjee submitted that Binani Cement was in distress because of its management’s inability to prepare a restructuring plan.
The company had committed to its lenders in January that it would come up with a turnaround plan, Bank of Baroda had said in its application. The lenders met the company management again in April, but it has still not been able to firm up a restructuring plan, Banerjee told the bench.
In fiscal 2016-17, the privately held Binani Cement—a unit of Binani Industries Ltd—reported a net loss of Rs349.31 crore on revenue of Rs1,534.62 crore, according to the auditor of its parent, MZSK and Associates.
Binani Industries’ net consolidated loss was at Rs468.38 crore and its consolidated liabilities exceeded assets by Rs1,525.32, the auditor said in its report.
The bench ruled on Tuesday “on the basis of documents filed by the financial creditor (Bank of Baroda) that (the) corporate debtor (Binani Cement) has committed default in making payment of Rs97.7 crore and therefore... the application for initiating corporate insolvency resolution process deserves to be admitted.”
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