After the resolution professional (RP) of Binani Cement submitted the resolution plan of UltraTech Cement’s Rs 79.60 billion offer for approval from the Kolkata bench of the NCLT on Friday, Dalmia Bharat Cement also geared up for battle by deciding to challenge it in the tribunal on the very day it will be up for discussion.
In its previous order, the NCLT had directed various stakeholders involved in the takeover of Binani Cement case to apprise it on Monday, and it is expected that UltraTech’s plan will be up for discussion on that day itself.
Sources said that Dalmia Bharat’s challenge may be primarily based on the objection that UltraTech is ‘ineligible’ under Section 29(A) of the IBC and the company may also allege the “hurried manner” in which UltraTech’s proposal was passed by the Committee of Creditors (CoC) of Binani Cement.
According to a Dalmia Bharat official, on May 18, it had sought a 10-day timeframe from the CoC to consult its other consortium partner India Resurgence Fund, when asked to revise its bid. It said that the “consortium partners are often out of the country and both Dalmia Bharat and India Resurgence Fund have to seek multiple approvals before taking any decision.” However, the CoC had asked it to revert by May 23.
“Without giving us any reason, the CoC imposed an unreasonably short deadline of just three days with insufficient particulars on UltraTech’s plan for us to revert,” the official of Dalmia Bharat said, adding that the CoC had only quoted the money to Dalmia Bharat to up its offer and “no actual resolution plan” was shown to it to match the offer from UltraTech.
“As such, whatever the CoC submitted to the NCLT is not a resolution plan but only an offer. There is definitive distinction between the two. A resolution plan is not only about mere numbers but also the feasibility and viability of the plan and the engagement for the future,” the source said.
Despite the tribunal ordering the CoC to admit and consider UltraTech’s offer and reconsider the plan from Dalmia Bharat only if it ups its offer to match the one from UltraTech, officials at Dalmia Bharat believe that after the CoC had selected an H1 bidder according to IBC rules, a second plan cannot be considered.
Dalmia Bharat had previously alleged UltraTech was ineligible to bid for Binani Cement but its contention had been turned down by the NCLAT.
The Supreme Court preferred to stay out of this case for now unless the appellate tribunal passes an order on it.
However, sources in Dalmia Bharat indicated that if the Kolkata bench approves UltraTech’s plan without the consent of NCLAT, it will move to the appellate body as well as file a case in the Supreme Court against the tribunal’s order.
Sources among the lenders stated that the UltraTech plan may need approval of the NCLAT as well.
The CoC issued a letter of intent (LoI) to UltraTech Cement which overrides its previous LoI to Dalmia Bharat. Based on this LoI, the Aditya Birla Group company has deposited Rs. 6.52 billion with the lenders as its guarantee to take over Binani Cement.
On the other hand, the NCLAT, while hearing an appeal from the RP, Vijaykumar Iyer, questioned if the tribunal “has the right to decide the misconduct of a RP while entertaining application under Section 60(5) of the Insolvency and Bankruptcy Code (IBC), 2016.”
In the May 2 order, the Kolkata bench of the NCLT had upheld allegations filed by the promoter of Binani Cement against Iyer for conducting an improper valuation of the firm’s stressed assets as well as for violating rules laid down by the Insolvency and Bankruptcy Board of India (IBBI). This resulted escalated cost of the resolution process.
Sources among resolution professionals are viewing NCLAT’s order on this matter with optimism as it may set a precedence for future conduct of RPs.