Large insolvency cases saw several twists and turns over the past week as lenders struggled to find investors for resolution of stressed assets.
In this weekly series on stressed assets, we bring the latest on high-profile cases including Essar Steel, Sterling Biotech and Reliance Communications.
Ruias challenge ArcelorMittal’s bid for Essar Steel
Essar Steel promoters Ruias moved the bankruptcy appeals tribunal against steelmaker ArcelorMittal’s bid for the stressed firm, calling the offer invalid as the suitor’s billionaire promoter Lakshmi Mittal and the world's largest steelmaker had hidden their links with his brothers and their loan-defaulting companies.
Ruias said Lakshmi Mittal and ArcelorMittal India Ltd had “conspired to suppress vital facts” and misled the Committee of Creditors, the Supreme Court and the bankruptcy courts into believing that they had ceased to have any business association with Lakshmi Mittal’s brothers Pramod and Vinod and their companies.
The development will further stretch the two-year insolvency-resolution process.
Essar Steel was among the 12 large companies identified by the Reserve Bank of India in June 2017 on its first list of defaulters under the Insolvency and Bankruptcy Code (IBC). Essar Steel owes almost Rs 50,000 crore in total.
Sterling Biotech to go for liquidation
Sterling Biotech will go for liquidation after the bankruptcy tribunal rejected the lenders’ petition to withdraw insolvency proceedings against the pharmaceutical firm.
The National Company Law Tribunal (NCLT) took the decision on the grounds that the 270-day period stipulated for insolvency resolution had lapsed on 8 March.
The order is likely to be challenged by lenders and promoters in a higher tribunal or court.
In March, the NCLT had questioned the one-time settlement offered by promoters Sandesaras, who are embroiled in a bank fraud estimated to be more than Rs 5,000 crore.
R-Com's insolvency proceedings begin
Anil Ambani-owned Reliance Communications (R-Com) finally saw the start of insolvency proceedings.
On Thursday, the NCLT admitted R-Com for insolvency proceedings and allowed it to exclude the 357 days spent in litigation from the resolution process.
The NCLT also superseded R-Com’s board, allowed a consortium of 31 banks led by the State Bank of India (SBI) to form a committee of creditors (CoC) and appointed a resolution professional to run the company.
The court will next hear the case on 30 May.
R-Com, which has total debt of more than Rs 50,000 crore, becomes the first Anil Ambani group company to be declared bankrupt. The NCLT’s decision comes after R-Com last month withdrew a petition challenging an order of the tribunal that allowed insolvency proceedings to be initiated.
DBS wants more from Patanjali's offer for Ruchi Soya
Yoga guru Baba Ramdev-led Patanjali Ayurved faced a hurdle in its bid to acquire debt-laden Ruchi Soya with Singaporean lender DBS Bank contesting its resolution plan of Rs 4,350 crore.
The foreign bank told the NCLT that it has not received fair value. "In the resolution plan, DBS claims it is getting about Rs 117 crore, which is much less than about Rs 200 crore that it may get if the company goes for liquidation," a person in the know told VCCircle.
DBS is one of the 27 financial creditors to Ruchi Soya, which has total outstanding dues of about Rs 12,000 crore, with around Rs 9,385 crore owed to its financial creditors. SBI has the largest exposure at Rs 1,816 crore.
SSG challenges CarVal-Arcil offer to buy Uttam Galva units
Hong Kong-based SSG Capital has moved the NCLT against the lenders’ acceptance of Rs 2,500 crore bid by CarVal Investors and Asset Reconstruction Company (India) Ltd (Arcil) for the two stressed units of Uttam Galva.
SSG Capital told NCLT that its resolution plan of Rs 4,506 crore, including Rs 1,000 crore upfront, was rejected by the lenders without any reason.
The combined debt for Uttam Value Steels and Uttam Galva Metallics stands at around Rs 6,100 crore.
The next hearing will be on 21 May.