Union Bank gets relief as NCLT asks Bharati Defence liquidator to admit Rs208 cr claim | Mint
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Business News/ Companies / Union Bank gets relief as NCLT asks Bharati Defence liquidator to admit Rs208 cr claim
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Union Bank gets relief as NCLT asks Bharati Defence liquidator to admit Rs208 cr claim

The liquidator had earlier rejected the claim saying it did not qualify as a financial debt, and hadn’t been filed in time

NCLT had ordered initiation of corporate insolvency of Bharati Defence in June 2017 after Edelweiss ARC filed an insolvency petition against it. Premium
NCLT had ordered initiation of corporate insolvency of Bharati Defence in June 2017 after Edelweiss ARC filed an insolvency petition against it.

MUMBAI : The Mumbai bench of the National Company Law Tribunal (NCLT) has directed the liquidator of insolvent firm Bharati Defence and Infrastructure Ltd to admit Union Bank of India’s claim amounting to Rs208 crore as an operational debt.

The liquidator had rejected the state-owned bank’s claim in February 2019 saying it did not qualify as a financial debt–as had been initially filed–under the provisions of the Insolvency and Bankruptcy Code (IBC). The liquidator had also said the claim had not been filed in time.

Section 5(21) of the IBC defines operational debt as a claim in respect of the provision of goods or services including employment. 

Union Bank of India’s Hong Kong branch had filed an application before NCLT asking for the liquidator’s rejection to be set aside and for the bank’s claims to be admitted. The bank also stated that since its debt was under the financial debt category, it should be classified as a financial creditor to Bharati Defence.  

Union Bank of India had also said that if the court did not grant its application, it should be allowed to file its claim as an operational creditor. 

“We do not hesitate to hold that the applicant is an operational creditor of the corporate debtor (Bharati Defence)," a NCLT bench led by Justice Prabhat Kumar said in its order on 21 November.

Union Bank of India, under an agreement dated 23 June 2011, had sanctioned a term loan to Great Offshore (International) for construction of three shipping vessels. As per the agreement, the funds disbursed had to be used for the construction of one shipping vessel (150T anchor handling tug supply vessel bearing hull number V-383).

Bharati Defence was constructing the vessel for Great Offshore’s subsidiary Norwegian Shipping Ltd. When Bharati Defence went into liquidation in January 2019, Union Bank of India terminated the contract and sought a refund along with interest. Consequently, the bank filed its claim under the corporate insolvency resolution process, which the liquidator rejected.

NCLT had ordered initiation of corporate insolvency of Bharati Defence in June 2017 after Edelweiss Asset Reconstruction Company filed an insolvency petition against the company. Thereafter, in January 2019, NCLT directed the liquidation of the company and appointed Vijaykumar V Iyer as the liquidator.

Union bank was represented by MDP & Partners.

Edelweiss ARC and IDBI Bank are among major creditors of Bharati Defence and Infrastructure. The company owes lenders over Rs11,300 crore.

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ABOUT THE AUTHOR
Priyanka Gawande
Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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Published: 30 Nov 2023, 06:57 PM IST
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