Binani Cement insolvency: UltraTech Cement, Binani Industries move NCLT against CoC vote

Binani Cement's journey towards insolvency resolution can be summed up as one step forward, two new speed-breakers ahead. Last week, after the Committee of Creditors (CoC) for the beleaguered firm voted in favour of the resolution plan submitted by the Dalmia Bharat-Bain Piramal Resurgence Fund consortium, two fresh petitions were filed with the National Company Law Tribunal (NCLT).

To begin with, UltraTech Cement reportedly filed another petition with the NCLT last Friday, seeking the cancellation of the lenders' vote. According to The Economic Times, Atul Daga, chief financial officer of UltraTech, had alleged that the resolution process at Binani Cement "was shrouded in secrecy", with bidders not being allowed to participate in the meetings. The company added that it would not shy away from even moving the Supreme Court if its petitions were not heard.

The same day, and in a similar vein, Binani Industries moved the NCLT asking that the CoC meeting held on March 14 be declared "null and void". The promoter of Binani Cements alleged that resolution professional Vijaykumar V. Iyer and Sumit Khanna, representative of Deloitte assisting the resolution plan, kept them out of the creditors' meeting. According to Binani Industries, this was "in gross violation and wilful disobedience of order dated March 3, 2018 passed by NCLAT" [National Company Law Appellate Tribunal]. The latter allegedly directed the resolution professional to intimate the suspended Board of Directors of Binani Cements if any CoC meetings were held. Hence the petition accused Iyer of "indulging in criminal obstruction of administration of justice".

Previously, a day after the Dalmia consortium was declared the highest bidder, UltraTech Cement had approached the bankruptcy court questioning the rejection of its bid. The Aditya Birla Group company had reportedly also served a notice to the resolution professional asking for details on the weight given to its bid compared to the winning bid. Furthermore, the company also hiked up its bid by Rs 700 crore to around Rs 7,200 crore in a last-ditch gambit to acquire the debt-stricken asset. UltraTech also offered to pay 100 per cent of secured lenders and unsecured lenders debt, but Iyer reportedly did not respond to the offer.

 
The hearing on this petition is scheduled for today. The company is reportedly hopeful that the Tribunal will rule in its favour since it had previously allowed Liberty House's post-deadline bid for Bhushan Steel.

Meanwhile, Binani Industries also has a pending petition with the NCLT. Last month, the parent firm had approached the Kolkata bench alleging that the resolution professional had a "personal interest" in undervaluing the cement company so that it could be given to their "favourite company" in the bidding race. Binani Industries had pegged the value of the beleaguered firm at Rs 17,300 crore, which is more than double the winning bid.

The odds certainly seem to be stacked against Dalmia Bharat, but if the NCLT rules in its favour, it would have made a rare hat-trick when it comes to snapping up stressed assets. It has already acquired Murli Cement and Kalyanpur Cement.

Otherwise, with the upper limit of 270 days set by the bankruptcy code for resolution fast approaching amid all this litigation drama, Binani Cement might just end up being liquidated.

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. So the window of opportunity for bankruptcy resolution has now narrowed to a little over a month.

With PTI inputs