Stressed assets: UltraTech revises bid for Binani Cement; Videocon faces insolvency
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As Indian banks grapple with stressed assets worth nearly $150 billion, various branches of the National Company Law Tribunal (NCLT) are monitoring hundreds of such cases.

In the fifth of a series of weekly round-ups on the insolvency cases, we check the status of the top cases that made news this week.

This week also saw passing of the Insolvency and Bankruptcy (Amendment) Ordinance, 2018 that gives relief to homebuyers by recognising them as financial creditors. It also clarified the term "related" party and set the procedure for withdrawal of cases from insolvency proceedings.

The NCLT has admitted cases of insolvency proceedings against consumer electronics maker Videocon Industries and textiles firm Shri Lakshmi Cotsyn. But this week, the tribunal reserved its order in the ongoing Amtek Auto and Adhunik Metaliks cases.

Binani Cement

UltraTech Cement Ltd has submitted its revised resolution plan to the NCLT’s Kolkata bench to acquire debt-laden cement firm Binani Cement after it was approved by the latter's committee of creditors. The next NCLT hearing is on June 18. However, Dalmia Bharat, which was previously announced as the successful bidder, is expected to contest UltraTech's delayed offer by citing that the Ordinance does not allow for late bids.

Dalmia Bharat had last month decided not to increase its bid to match UltraTech Cement, but has instead contested the latter’s eligibility for the acquisition. The conglomerate’s objections are likely to be heard at the National Company Law Appellate Tribunal (NCLAT) on July 10.

Both UltraTech and Dalmia Bharat have been locked in a battle to take over debt-ridden Binani Cement since March.

Videocon Industries

The NCLT’s Mumbai bench on Wednesday admitted Videocon Industries for insolvency proceedings following a plea by lenders, including the State Bank of India. The Mumbai bench on Thursday heard the petition by SBI and the next hearing in the case is scheduled for June 8.

Debt-ridden Videocon Industries is a part of the second list of defaulters identified by the Reserve Bank of India under the Insolvency and Bankruptcy Code last year. It owes lenders over Rs 20,000 crore. The company expects its lenders to be able to recover 80% of their claims through the resolution process.

Amtek Auto

Earlier this week, the NCLT’s Chandigarh bench reserved its order on the eligibility of UK-based metals group Liberty House to bid for Amtek Auto. In March, Liberty House emerged as the highest bidder, but in the following month, resolution professional Dinkar Venkatasubramanian questioned the firm’s suitability to buy the auto components maker.

Under the IBC, a resolution plan applicant is expected to clear debts of defaulting companies in which it owns a stake.

The auto components firm has been undergoing insolvency proceedings since July 2017. It owes lenders over Rs 10,000 crore. Besides Liberty House, the company had also attracted a resolution plan bid from US-based employee-owned hedge fund sponsor Deccan Value Investors.

Shri Lakshmi Cotsyn

Last week, NCLT’s Allahabad bench admitted a case of bankruptcy resolution against textiles firm Shri Lakshmi Cotsyn Ltd after it failed to repay loans to lenders including Union Bank of India, State Bank of India, and Bank of Baroda.

Union Bank of India had filed an application at the Allahabad bench to initiate corporate insolvency proceedings against the textiles company. Shri Lakshmi Cotsyn owes lenders about Rs 4,000 crore.

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