NCLT Suggests Out-Of-Court Settlement to Binani Cement, Creditors

Atleast 14 petitions have been filed in the Binani Cement insolvency matter underway at the NCLT in Kolkata.

In an interesting twist to the Binani Cement Ltd insolvency proceedings, the National Company Law Tribunal on 27 March suggested an out-of-court settlement between Binani and its committee of creditors. This after Binani Industries Ltd. argued for a termination of the insolvency proceedings against its subsidiary.

At least 14 different petitions have been filed in the Binani Cement insolvency matter underway at the NCLT in Kolkata. Key among them is the Binani Industries’ termination petition, and that’s what today’s hearing was mostly focused on.

Binani Industries has signed an agreement with unsuccessful bidder UltraTech Cement Ltd to sell its 98.43 percent shareholding in the cement business to the Aditya Birla Group company for Rs 7,266 crore. This deal was determined outside the ongoing resolution process in which Dalmia Bharat Ltd-led consortium was selected as winning bidder by the CoC. Dalmia has contested the UltraTech-Binani deal as illegal. Here are key highlights of the hearing:

• Judge begins with discussing petitions related to objections to the committee of creditors’ approval of resolution plan.
• SBI Hong Kong claims equality with other financial creditors.
• Judge inquires why resolution professional has not presented UltraTech’s email offer to the CoC.
• Resolution professional says CoC unanimously decided on Dalmia as H1 (top) bidder.
• Binani Industries seeks 10 days to pay off all the financial and operational creditors and petitions for termination of insolvency proceedings against Binani Cement.
• Binani Industries says it has now found means to pay all the creditors and can make the payment before April 10.
• Judge says once proceedings start under the insolvency process the debtor has to approach the Supreme Court for approval to pay all creditors.
• Binani Industries argues that Dalmia Bharat Ltd. is trying to buy assets at a low value and that the tribunal can allow Binani Industries termination application by exercising inherent power.
• Judge asks resolution professional if they can consider giving Binani two weeks to pay all debts. Says as Binani has sought two weeks proceedings will take time.
• Judge suggests if CoC can consider out of court settlement. Says it's a suggestion not order.
• Dalmia Bharat agitates against consideration orders by NCLT.
• Judge says no direction given by court. Open to COC to consider Binani proposal. All petitions to be heard on April 2nd.

The board of Binani Industries Ltd met last week and decided to approach the NCLT to end insolvency proceedings against Binani Cement following the pact with UltraTech.

To terminate the process, Binani Cement will have to repay its lenders and other liabilities, which by the company’s estimate total between Rs 5,600 - 6,000 crore.

(With inputs from The Quint’s Ishadrita Lahiri in Kolkata. This article was first published on BloombergQuint.)