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Sterling Biotech: Chinks in bankruptcy law exposed

IANS  |  Mumbai 

The of the law has been exposed once again, this time from the banker's side, in the Sterling Biotech resolution plan.

In this case, the bankers had approved a "One Time Settlement" (OTS) proposal from the absconding management of the company -- seeking withdrawal of the from Insolvency and Code (IBC) process -- by a thumping majority of 90 per cent.

Although the law provides for such an exercise from the committee of creditors (CoC) under the new amendments made in the IBC, the (NCLT) tried restoring the balance by rejecting the withdrawal while slamming creditors for the hasty manner in which they tried to withdraw the

The matter came to light when NCLT Mumbai pulled up for accepting an offer from fugitive promoters of the Gujarat-based Sterling Biotech group, which is embroiled in a Rs 8,100-crore

The bizarre led the bench to note: "How the proposal submitted by the is accepted by the financial creditors creates suspicion when the promoter/ is absconder and ED/is searching for them."

The NCLT rap on the Sterling Biotech comes at a time when two such proposals by and -- offering to settle 100 per cent dues of the lenders -- were rejected by their committees of creditors (CoC).

The amended provides for withdrawal of a from the insolvency process if 90 per cent of the creditors approve a settlement.

The NCLT bench of V.P. Singh and R. Duraiswamy has taken strong exception and wondered how the lenders and creditors of the could accept an offer from Sterling Biotech's absconding and Joint Managing Chetan J. Sandesara, when the (ED) and the (CBI) are on the lookout for them.

Posting the matter for further hearing on March 26, the bench said it would also issue notices asking all the central agencies -- (MCA), ED, (IT), CBI, (SEBI), (RBI) and others -- whether they want to make any representations in the matter.

"It is pertinent to mention that the promoters of Sterling Biotech are absconders and we often get news from the newspapers that various government agencies like ED, and others are unable to track them," the NCLT bench observed on Monday.

The Sterling Biotech matter came before the NCLT in June 2018 and during pendency of the matter, last week, the committee of creditors comprising banks, suddenly voted to withdraw the proceedings against the Sandesara brothers following the offer from them.

--IANS

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, March 14 2019. 20:12 IST
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