Active Stocks
Wed May 29 2024 11:23:24
  1. Tata Steel share price
  2. 174.05 -0.46%
  1. Power Grid Corporation Of India share price
  2. 316.50 1.18%
  1. HDFC Bank share price
  2. 1,509.10 -1.40%
  1. ITC share price
  2. 428.25 -0.15%
  1. NTPC share price
  2. 363.80 -0.41%
Business News/ Companies / News/  NCLAT to hear pleas challenging Birla Tyres resolution plan next week
BackBack

NCLAT to hear pleas challenging Birla Tyres resolution plan next week

One of the pleas filed by HDFC Bank challenging the resolution plan will be heard on 23 November. The other petition involving Kesoram Industries will be heard on 24 November

Last month, the Kolkata bench of the National Company Law Tribunal (NCLT) approved the resolution plan jointly submitted by Himadri Speciality Chemical and Dalmia Bharat Refractories to acquire Birla Tyres under the Corporate Insolvency Resolution Process.Premium
Last month, the Kolkata bench of the National Company Law Tribunal (NCLT) approved the resolution plan jointly submitted by Himadri Speciality Chemical and Dalmia Bharat Refractories to acquire Birla Tyres under the Corporate Insolvency Resolution Process.

New Delhi: The National Company Law Appellate Tribunal (NCLAT) will hear two separate pleas involving the resolution plan of Birla Tyres next week.

One of the pleas, filed by HDFC Bank challenging the joint resolution plan of Himadri Speciality Chemical Ltd and the Dalmia Bharat group to acquire Birla Tyres, will be heard on 23 November. The other petition, involving Kesoram Industries Ltd, the parent company of Birla Tyres, contesting the rejection of its claims as a financial creditor in the insolvency process, will be heard on 24 November.

Last month, the Kolkata bench of the National Company Law Tribunal (NCLT) approved the resolution plan jointly submitted by Himadri Speciality Chemical and Dalmia Bharat Refractories to acquire Birla Tyres under the Corporate Insolvency Resolution Process (CIRP). The approved consortium proposed a partial repayment of 1,100 crore towards the bank loans of the BK Birla group company.

These pleas assume significance as there is still no clarity on the business revival of the company despite the acquisition by Dalmia Bharat Group. The fate of hundreds of Birla Tryres’s workers hangs in balance as a result of the alleged unilateral rejection of their claims by the resolution professional in the approved resolution plan. 

These workers have also moved NCLT Kolkata and various other forums seeking payment of dues owed to them by the company. This complicates the case further since workers' dues hold high priority in terms of the IBC waterfall mechanism. If the accepted dues are higher, it could lead to an escalation in acquisition costs for Dalmia Bharat Group.

Various other challengers to the resolution plan claimed that it lacked feasibility and viability, failing to outline how the ailing industry would be revived and workers' interests protected. The Committee of Creditors (CoC) is accused of prioritizing the recovery of their money, contrary to the intent of the insolvency resolution process. The successful bidders, Himadri and Dalmia, are allegedly not interested in running the business. NCLT, however, rejected these contentions and approved the resolution plan.

The opponents of the approved resolution plan also argued that the resolution plan violated provisions of the Insolvency and Bankruptcy Code (IBC) and contended that it wouldn't revive Birla Tyre as the core assets would not remain with the company, as outlined in the demerger/arrangement schemes mentioned in the plan. NCLT, however, rejected these contentions and approved the resolution plan in its order dated 19 October.

In May 2022, SRF Ltd, an operational creditor, initiated insolvency proceedings against Birla Tyres, which owed over 1100 crore to creditors, including Axis Bank, State Bank of India, ICICI Bank, and Yes Bank.

Various expressions of interest were received from potential applicants, including Ceat, Bain-Piramal-backed India Resurgent Fund, Jindal Steel & Power, Bommidala Enterprises, Purnendu Chatterjee-promoted MCPI, and Himadri Speciality Chemicals to acquire the company.

Following NCLT's approval, the consortium of Himadri and Dalmia reportedly took physical possession of Birla Tyres' plant and machinery in Balasore, Odisha, after completing the transaction with the creditors. Subsequently, Birla Tyres' shares were also delisted from the stock exchanges.

Established in 1991 as a subsidiary of Kesoram Industries, Birla Tyres became a separate entity in 2019 after being separated from its parent firm.

You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

ABOUT THE AUTHOR
Krishna Yadav
Krishna, a lawyer turned journalist, is a key member of Mint's corporate team. He covers major legal battles in Delhi's courtrooms, with a focus on finance, markets, and policy. Additionally, he crafts easy-to-understand explainers for complex stories and holds a PG Diploma from the renowned Asian College of Journalism.
Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 16 Nov 2023, 05:51 PM IST
Next Story footLogo
Recommended For You