NCLT questions Sterling Biotech lenders on accepting deal from promoters

The National Company Law Tribunal (NCLT) asked lenders of Sterling Biotech how they had accepted the one-time settlement (OTS) offer from the promoters of the bankrupt firm.

The NCLT also plans to write to central government agencies investigating Nitin and Chetan Sandesara in case they want to make any representation. The NCLT observed that if the Sandesara brothers were absconding, how did banks accept the OTS. The case will be heard again on March 26.  

The tribunal will also ask the Ministry of Corporate Affairs, the Enforcement Directorate (ED), income-tax authorities, Central Bureau of Investigation (CBI), Securities and Exchange Board of India, and the Reserve Bank of India for their representation. The absconding Sandesara brothers are also facing probe from multiple agencies for bank fraud.

Sterling Biotech was referred to the NCLT in June last year. But on March 7, the committee of creditors (CoC) voted to withdraw bankruptcy proceedings against the company after accepting the OTS offer. The resolution professional of Sterling Biotech did not comment on an email questionnaire sent on Tuesday and the company has not made any disclosure to the stock exchanges on the NCLT observation.

On Friday, the Indian lenders had agreed to the OTS offer made under Section 12A of the Insolvency and Bankruptcy Code (IBC), 2016. The promoters, bankers said, have made an offer which entails a significant haircut of close to 65 per cent for the lenders.

This also comes at a time when two proposals from Essar Steel and Bhushan Power & Steel offering 100 per cent payment of dues to the lenders under Section 12A of the IBC have been rejected by the respective CoC.