Gujarat NRE Coke insolvency: 2,000 jobs at risk after CoC rejects sole bid

Gujarat NRE Coke owes banks around Rs 55 bn inclusive of interest

The Bench here of the National Company Law Tribunal (NCLT) has fixed the coming Monday for the case of Gujarat NRE Coke, referred to it under the Insolvency and Bankruptcy Code (IBC). Around 2,000 jobs are at stake.

The committee of its creditors got a single bid for the company, from Ahmedabad-based Rare Asset Reconstruction. They rejected the bid, though it was higher than the liquidation value of Rs 3.62 billion. The 270-day deadline for resolution under the Code ended this Monday.

Gujarat NRE Coke has two metallurgical coke plants, at Khambhalia and Bhachau in Gujarat; a third one is at Dharwad in Karnataka. The company also has a 87.5 Mw wind power energy unit and a mini steel mill in Gujarat, to recycle steel scrap. It uses wind energy to manufacture TMT Bars.

On December 22, the resolution professional appointed under the Code’s provisions, Sumit Binani, had applied to the NCLT for an extension beyond the 270-day statutory period for finding a solution. It was the first such request for extension under the IBC. However, the Bench turned down the application. 

Under the rule, the application for a resolution plan will have to be filed with the NCLT within 180 days; an extension of 90 days may be granted. If an agreed solution is still absent, the company may be liquidated.

      Tough Times

• The committee of its creditors got a single bid for the firm, from Ahmedabad-based Rare Asset Reconstruction
• They rejected the bid, though this was higher than the liquidation value of Rs 3.62 bn
• On December 22, the resolution professional had applied to NCLT for extension beyond the 270-day statutory period
• If no solution is agreed on, the firm may be liquidated

The application for extension was filed on the argument that there were at least four or five Expressions of Interest for the company but not enough time for the due-diligence. The workers gave their own resolution plan only last Saturday but this could not be placed before the committee of creditors, Binani said. The NCLT was, however, informed of the development.

Arun Jagatramka, the company’s promoter, had planned to give a resolution plan but then came the ordinance barring such promoters of a bankrupt company from bidding in most circumstances. Jagatramka has 26 per cent equity in Gujarat NRE Coke and is considering what to do.

Interestingly, it wasn’t Gujarat NRE Coke’s lenders which first filed an application for initiation of the Corporate Insolvency Resolution Process; it was the company itself. “There was no compulsion. It was because of the uncertainty and the interest due to banks was accumulating,” explained Jagatramka.

Gujarat NRE Coke owes a combined Rs 55 billion, inclusive of interest, to a number of banks. Jagatramka said a resolution plan had been given to the latter in July 2017.