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Insolvency process: Rs 40 billion in debt, Sterling Biotech lands in NCLT

In October 2017, the ED began a probe into alleged money laundering by the company and its promoters, Nitin and Chetan Sandesara

Advait Rao Palepu  |  Mumbai 

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Pharmaceutical company has been admitted by the National Company Law Tribunal (NCLT) for insolvency proceedings under the Corporate Insolvency Resolution Process (CIRP).

The Gujarat-based company owes banks more than Rs 40 billion. Its parent, the Sterling Group, along with other businesses, owes lenders more than Rs 50 billion.

ALSO READ: ED attaches Gujarat drug firm's Rs 47-bn assets for alleged PMLA violation

Advocate Shyam Kapadia approached the NCLT on behalf of Andhra Bank, stating that while the firm’s debts piled up, the promoters had fled the country. As of December 2016, the company defaulted on loans of Rs 54 billion.

In October 2017, the Enforcement Directorate (ED) began a probe into alleged money laundering by the company and its promoters, Nitin and Chetan Sandesara.

ALSO READ: CBI files loan defaulting case against for Rs 5,000 cr

It is alleged that several belonging to the Sandesara brothers had obtained credit worth Rs 53.83 billion from banks on the basis of false and fabricated documents.

These loans turned into (NPAs), and had been sanctioned by a consortium of banks led by Andhra Bank and comprising UCO Bank, State Bank of India, Allahabad Bank and the Bank of India.

ALSO READ: Rs 5k-cr loan default case: ED raids 7 Delhi locations of Sterling Biotech

Now that the company has been admitted for insolvency proceedings, lenders other than Andhra Bank will file their claims with an appointed interim resolution professional.

Banks have so far declared the following accounts as fraudulent: Sterling Group, including Sterling Biotech, Sterling Port, PMT Machines, Sterling SEZ and Infrastructure, and

ALSO READ: Rs 50-bn Sterling scam: ED files chargesheet against ex-Andhra Bank exec

Further, in January 2018, the ED arrested former Andhra Bank Director in connection with an FIR registered by the Central Bureau of Investigation (CBI).

The agency said “certain entries” in a diary the Income Tax Department seized in 2011 spoke of the Sandesara brothers paying “Mr Garg, director, Andhra Bank” Rs 15.2 million in 2008 and 2009.

On June 1, the ED attached assets worth around Rs 47 billion.

The assets include immovable properties of about 4,000 acres, plant machinery, around 200 bank accounts of various and accounts of promoters, shares worth Rs 66.7 million, and high-end luxury cars. Apart from the Sandasera brothers and others, the CBI has also booked Garg.

First Published: Tue, June 12 2018. 07:10 IST