Patanjali has, in a letter to Ruchi Soya’s lenders, cited Section 29A of the Insolvency and Bankruptcy Code (IBC). Since Business Standard has not seen the letter, it cannot verify the allegations raised.
The Committee of Creditors (CoC) comprising the lenders met on Wednesday to discuss the bids made by both companies and their respective resolution plans for the insolvent entity. Ruchi Soya was admitted to the Corporate Insolvency Resolution Process (CIP) in December 2017. Financial creditors have filed claims worth around Rs 104 billion; operational creditors have filed claims worth Rs 360 million.
Section 29A states the bidders for an insolvent company need to meet specified eligibility criteria. Specifically, it means a bidder cannot be allowed to offer a resolution plan under CIRP if the promoter (bidding company) is ‘connected’ to another stressed-loan corporate.
Pranav Adani, MD of Adani Wilmar and a relative of Adani group chief Gautam Adani, is married to Namrata, daughter of Vikram Kothari, the erstwhile promoter of Rotomac group who was arrested by the CBI, in February, after Bank of Baroda complained of a fraud by his company.
According to the recent IBC ordinance, approved by the President on June 6, the definition of “connected person” has broadened to include “related party” and “relatives” like members of the family, husband, wife, father, mother and other familial relations, including in-laws.
Since the resolution plans from both bidders were submitted prior to the recent amendment by ordinance to the IBC, it is unclear whether the broadened criteria under Section 29A will apply to the present case.
Legal experts say that in recent cases, the National Company Law Tribunal (NCLT) has refrained from allowing changes to the IBC to be applied retrospectively.
Based on recent cases that have appeared before various benches of the NCLT, bidders, found to be connected to other defaulting promoters or firms, have been deemed ineligible.
On June 12, the CoC had declared Adani Wilmar the preferred (‘H1’) bidder. It had bid Rs 54.74 billion, of which Rs 43 billion would be paid to the lenders; it would also make an equity infusion of Rs 17 billion. Patanjali was declared the H2 bidder, based on their offer to pay Rs 57.65 billion, of which the lenders would get only Rs 40.65 billion.