NCLT-appointed resolution professionals are not a popular lot these days. Last month, UK-based Liberty House had moved the NCLT against the rejection of its bid for Bhushan Power and Steel by the Committee of Creditors arguing that the late submission of its bid was because the IRP did not intimate them about the deadline. This case will be heard tomorrow. And yesterday, UltraTech Cement, an Aditya Birla Group company, approached the bankruptcy court questioning the rejection of its bid for Binani Cement Ltd.
According to a Business Standard report, UltraTech had earlier served a notice to the resolution professional asking for details on the weight given to its bid compared to the winning bid. Last week, a Dalmia Bharat-Bain Piramal Resurgence Fund consortium had emerged victorious in the race for the beleaguered cement company. A source close to UltraTech told the daily that the company had not received any communication from the resolution professional barring a single-line email saying that its bid was rejected. "There was no transparency over how the bids were evaluated and why the UltraTech bid was rejected," the report quoted the source as saying.
To remind you, Bank of Baroda had dragged Binani Cement to NCLT last July after it failed to repay a loan of over Rs 97 crore debt - the total debt stands at Rs 3,884 crore - and the insolvency resolution process was being overseen by Deloitte's Vijaykumar Iyer. Apart from the Dalmia-led group and UltraTech, four other players had thrown their hats in the ring - Ramco Cement, Heidelberg, stockbroker Rakesh Jhunjhunwala and JSW Cement. The latter had won the first round, but the resolution professional had to call for rebids after new Binani liabilities emerged.
The report added that while Dalmia offered Rs 63 billion (approximately Rs 6,300 crore), UltraTech's offer was Rs 1 billion (Rs 100 crore) less. Since both bids were in the same range, UltraTech reportedly felt that the committee of creditors ought to have given both parties a chance to modify their offers. "UltraTech's offer was Rs 1 billion less, but that could have been matched with the Dalmia offer. Besides the Dalmia offer does not take care of over 3,000 unsecured creditors and small suppliers, while UltraTech offered to take care of all suppliers," the source claimed. While UltraTech offered a 30 percent haircut to all unsecured lenders, Dalmia's resolution plan offered to settle with only one unsecured lender, IDBI Bank. The hearing is expected to take place later this week.
Binani Industries, which holds 98 percent share capital of Binani Cements, is equally unhappy with Iyer. Last month the parent firm approached the Kolkata bench of NCLT alleging that the resolution professional had a "personal interest" in undervaluing the cement company so that it could be given to their "favourite company" and pegged the value of the beleaguered firm at Rs 17,300 crore, which is more than double the winning bid. This petition is scheduled to be heard by the NCLT on March 13.
With the upper limit of 270 days set by the bankruptcy code for resolution fast approaching amid all this litigation drama, will Binani Cement end up being liquidated?