Stressed assets: Binani battle drags on; Bhushan’s door opens for Liberty House
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A year ago, on 5 May 2017 to be precise, the government gave greater powers to the Reserve Bank of India (RBI) to resolve the mounting problem of banks’ bad loans. In the following months, the RBI nudged several lenders to take defaulters to task. Many of those defaulters landed in the National Company Law Tribunal, which oversees bankruptcy cases.

One year on, what has been the progress on such cases? The tribunal’s various branches are now monitoring several hundred cases of stressed assets. In the first of a series of weekly round-ups, we compile a list of the top five cases and their latest status to keep you informed of the developments. These cases are among the first 12 referred for insolvency by the RBI in June 2017 and are under deadline pressure to finalise a resolution plan.

Binani Cement:

The battle for takeover of debt-laden Binani Cement Ltd has dragged on for a third month with Dalmia Bharat Ltd contesting UltraTech Cement Ltd’s eligibility to bid. On 2 May, the Kolkata bench of the NCLT asked Binani Cement’s committee of creditors to consider UltraTech’s bid.

The Supreme Court on Thursday set aside a civil appeal by Dalmia Bharat, which had sought a stay on a 4 May order by the National Company Law Appellate Tribunal (NCLAT) that allowed Binani Cement’s lenders to consider a bid from UltraTech. Hearing for a Dalmia Bharat appeal is pending at the NCLAT on 22 May. Dalmia Bharat will have the option to go back to the apex court after the NCLAT hearing.

Bhushan Steel:

Tata Steel Ltd, which was previously named the selected bidder for acquisition of Bhushan Steel Ltd, approached the NCLAT on Tuesday challenging an NCLT order allowing the target company’s creditors to consider a late bid from the UK’s Liberty House. The NCLAT refused to overturn the order, causing a setback to Tata Steel.

The lenders to Bhushan Steel are now likely to evaluate bids of Liberty House as well as Tata Steel, before narrowing down on one and submitting their decision to the NCLAT.

Bhushan Steel owes its lenders more than Rs 45,000 crore. Tata Steel had offered a bid of Rs 24,000 crore while Liberty House has submitted a Rs 26,000 crore resolution plan.

Essar Steel:

Numetal Mauritius on Friday moved the NCLAT challenging an order by the Ahmedabad bench of the NCLT that had disqualified the company from bidding for Essar Steel Ltd. The next hearing in the matter is scheduled for 17 May, where both Numetal and ArcelorMittal plan to appeal the NCLT decision. Both Numetal and ArcelorMittal were expected to clear debts of defaulting companies in which they own a stake.

Last month, the lenders to Essar Steel were asked by the Ahmedabad bench of the NCLT to reconsider the two bids by Numetal and ArcelorMittal that they had earlier rejected as per Section 29A of the Insolvency and Bankruptcy Code. The section bars related parties or owners of loan defaulters to bid for stressed assets.

Era Infra:

The NCLT’s principal bench on Tuesday ordered initiation of insolvency proceedings against Delhi-based realty firm Era Infra & Engineering Ltd, which owes lenders more than Rs 10,000 crore. The case was referred to the NCLT by state-run Union Bank of India.

The insolvency proceedings of the realty firm will officially commence now. Under the Insolvency and Bankruptcy Code, a resolution plan will have to be approved within 180 days with a maximum extension of 90 days.

Jyoti Structures:

A hearing in the matter of Jyoti Structures’ insolvency proceedings is scheduled for 14 May at NCLT Mumbai.

A secured financial creditor, DBS Bank Ltd, had on Monday challenged the proposed resolution plan for Jyoti Structures alleging the voting was not conducted in a fair manner. The engineering, procurement and construction firm had received a lone bid from a consortium of high net-worth individual investors led by Sharad Sanghi, chief executive officer at Netmagic Solutions.

After a few failed attempts, the resolution plan had received creditors’ vote last month. More clarity will emerge after the next week’s hearing.

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