NCLT approves BRS Ventures' Rs 12.14 bn plan for Assam Company takeover

The Guwahati bench of NCLT on Thursday approved the Rs 12.14 billion resolution plan of Abu Dhabi-based BRS Ventures for acquiring the stressed assets of Assam Company (India) Ltd, which was brought under the insolvency resolution process in October last year. 

Under this plan, which is nearly 3.5 times the liquidation value of Assam Company, the lenders will be taking a 20 per cent haircut over their total claims, including interest. However, the unsecured creditors will be receiving Rs 500 million and claims of operational creditors and the workers in the company have been addressed fully in the resolution plan.

A monitoring committee will now be appointed by the bankers to monitor the implementation of the resolution plan.

  

Sources said BRS Ventures, whose resolution plan was approved by the Committee of Creditors (CoC) on August 10, has already furnished a Rs 8.34 billion bank guarantee and the residual amount will be paid to the lenders within the next three months. However, an upfront cash payment of Rs six billion needs to be made to the financial creditors under the resolution plan, which can be invoked by the banks from the bank guarantee itself.

“The resolution plan takes care of almost all stakeholders. Out of 12 financial creditors, secured lenders like SBI, IOB, BOB, etc succeeded in getting about 80 per cent of their total dues. The company had a total debt size amounting to Rs 15.26 billion. The resolution plan also takes care of operational creditors which include workmen and employee who are getting 100 per cent of their admitted claim”, Kannan Tiruvengadam, the resolution professional of Assam Company, who is associated with LSI Resolution, said.

In an eight-page order, P K Saikia, member–judiciary at Guwahati bench of NCLT said, “The approved resolution plan shall come into force with immediate effect. All relevant parties in relation to the Final Resolution Plan are to be bound by the terms and conditions mentioned therein in accordance with Section 31(1) of the IBC, 2016”.

Legal sources opined that the above-mentioned section makes it binding on all parties involved in the resolution process to honour the tribunal’s order.

Moreover, Saikia has cautioned that in case there is any deviation in implementing the approved resolution plan, the concerned party can be punished under the IBC framework.

In its order, the Tribunal noted that the proposed investment in Assam Company is inspired by the initiatives of the Central Government for development of the north-eastern states and welfare of 30,000 employees of Assam Company is one of the key objectives of the resolution plan.

Sources who were directly associated with the resolution process, are of the view that after completion of the acquisition, BRS Ventures may opt to turn the 14 tea plantations under Assam Company to cultivate herbs and other medicinal plants and bushes which may be supplied to the Assam government.

“B R Shetty, the owner of BRS Ventures, has already made the chief minister of Assam on this,” the source told Business Standard.

Over the oil resources, BRS Ventures is most likely to rope in Abu Dhabi based oil exploration firm, Mubadala Petroleum LLC to explore the oilfields under Assam Company and subsequent to the findings, oil extraction contract or ventures may be given to state-run oil companies.

The resolution process of Assam Company was marred by allegations over favouritism, issues of eligibility under Section 29(A) of the IBC and compliance issues with M K Shah Exports and James Warren Company taking their allegations to the Appellate Tribunal.

Although around 14 potential bidders had picked up the expression of interest, only four bids were finally submitted. These bidders were Dhunseri Petrochem, James Warren Tea, Surakhsa Asset Reconstruction and BRS Ventures. However, BRS Ventures had outbid the others by over three times.

Resolution plan of Assam Company at a glance –

BRS Ventures’ resolution plan valued at Rs 12.14 bn

Upfront cash payment of Rs 6 bn to be made to financial creditors

Balance to be cleared in next three months

Resolution plan takes care of 100% outstanding of 30,000 workers

BRS Ventures to take care of healthcare, education and housing needs of employees and their families