The Bench of the National Company Law Tribunal (NCLT) here has ordered the liquidation of debt-ridden pharmaceutical company Sterling Biotech.
This is a setback for its lenders. They were hoping they could withdraw the insolvency proceedings and accept a one-time settlement (OTS) offer from the promoters.
The tribunal had reservations on this. It also felt that by accepting a withdrawal of insolvency proceedings (under Section 12A of the Insolvency and Bankruptcy Code), the company would essentially revert to the promoters, who are absconding and been declared as wilful defaulters. Section 29A of the Code prohibits promoters of a defaulting company from bidding for it.
The committee of creditors (CoC) had approved of the promoters' OTS offer by a 90 per cent majority. The promoters had offered to pay Rs3,945 crore; of this, they'd paid Rs179 crore. The company owes Rs8,100 crore to the banks; Sterling Group itself owes Rs15,000 crore. The other group company, Sterling SEZ, has also gone into liquidation.
The promoters had offered an OTS earlier, too.
However, only 89 per cent of the lenders were for accepting it; 90 per cent is required. The resolution professional (RP) appointed for the case did not inform the NCLT about this and the tribunal had rebuked him. After 90 per cent approval came for the second OTS, the lenders applied to withdraw the bankruptcy proceedings. However, Madison Pacific Trust, one of the lenders, challenged this, saying it held over 10 per cent voting right in the CoC and its consent was not sought by the RP.
The tribunal had then sought views from the Government of India, Enforcement Directorate, Securities and Exchange Board of India (Sebi), Reserve Bank of India and the Central Bureau of Investigation. The government agencies had objected to the OTS offer, RBI was neutral and Sebi was for acceptance.