One step forward, two steps back...that's the story of Binani Cement's insolvency resolution journey. Earlier this month, the National Company Law Tribunal (NCLT) gave the green light to the Committee of Creditors (CoC) of Binani Cement to consider the post-bidding offer made by Aditya Birla Group's UltraTech Cement. But the Dalmia Bharat-Bain Piramal consortium, which was previously declared the highest bidder for the beleaguered cement company, challenged the decision first at the National Company Law Appellate Tribunal's (NCLAT) and then the Supreme Court.
Then yesterday, after the apex court rejected Dalmia Bharat's plea to stay the NCLT order, one would think that the insolvency resolution process would finally move ahead. But the CoC meet scheduled for the day was reportedly cancelled by the resolution professional (RP) after receiving a letter from the plaintiff. According to The Financial Express, in the letter Dalmia Bharat claimed that UltraTech had become ineligible to participate in the auction after acting in concert with Binani Industries to exit the insolvency process.
"I have received objections from Rajputana Properties (the subsidiary firm of Dalmia Bharat) in relation to eligibility of UltraTech Cement under Section 29A of the Insolvency and Bankruptcy Code, 2016, to be a resolution applicant of Binani Cement ("corporate debtor")," RP Vijaykumar Iyer reportedly said in a letter to the members of the CoC on Wednesday evening. "As per the requirements of the code and the principles laid down by various NCLTs, I have taken cognizance of the objections and will review the facts and the law and take such other measures as is necessary to make my determination on the matter". The RP further stated that the meeting scheduled in Mumbai on May 10 "stands cancelled" in view of the objections raised, and in order to make an "independent, careful, fair and reasoned determination".
The stage now seems set for another protracted battle. Atul Daga, chief financial officer, UltraTech Cement, told the daily that his company has already approached the RP to hold a CoC meet as early as possible to "close" the insolvency resolution process as Dalmia Bharat's allegations were "baseless". He claimed that Dalmia Bharat was "trying to do a last minute attempt to do something to delay the process, because they are not able to match our bid". Citing a source in Binani Industries, the report added that Binani Cement's parent was also planning to write a letter to the RP, requesting a CoC meeting immediately.
To remind you, after the Dalmia Bharat-Bain Piramal consortium was declared the highest bidder for Binani Cement back in February with an offer to pay Rs 6,350 crore, UltraTech Cement had bowled a googly by making a separate out-of-court offer to its parent firm.
In March, UltraTech had said in a statement that Binani Industries had approached it for arranging funds to pay-off the lenders. The company's board agreed to issue a 'comfort letter' to provide Rs 7,266 crore in return for 98.43 per cent stake in Binani Cement. "If they can take the company out of insolvency proceedings, we are happy to pay the same amount of money to buy the company and it has to be used to repay the debt. For that purpose they wanted a letter of comfort and we have given them a letter of comfort. I do not think that we have gone against IBC anyway," Daga was quoted saying earlier. Operational creditors have been supporting this UltraTech-backed Binani offer as it covers entire claim. In the ensuing two months, UltraTech has reportedly sweetened its offer further, to close to Rs 8,000 crore currently.
Dalmia Bharat may have taken a hit at the different courts recently, but it is not out of the picture. After all, the Kolkata bench of the NCLT which allowed UltraTech's revised bid to be considered, also offered the Dalmia Bharat-controlled Rajputana Properties a chance to better its offer on the table.
The silver lining in all this litigation drama is that the Supreme Court has directed the NCLT to hear Dalmia Bharat's plea without adjournment from May 22. So some progress can be expected on the case in the days to come.