ET: NCLAT asks Ericsson to file objection over RCom’s plea for insolvency

4 February 2019: The National Company Law Appellate Tribunal (NCLAT) on Monday allowed telecom gear maker Ericsson India to file its objection by February 8 over Reliance Communications’s plea to proceed with insolvency process.

A two-member bench headed by Chairman Justice S J Mukhopadhaya also said that until further orders of the NCLAT or the Supreme Court, no one can sell, alienate, or create third party rights over RCom’s assets.

“Until further orders, the Appellants, corporate debtor (RCom), Respondent (Ericsson India), guarantors or any third party will not sell, transfer or alienate any moveable or immoveable property of RCom nor invoke any guarantee or mortgage or any other instrument without prior permission of this appellate tribunal or Supreme Court,” the NCLAT said.

The appellate tribunal has directed to list the matter on February 12 for orders.

During the proceedings, senior advocate Dushyant Dave appearing for Ericsson opposed the withdrawal of petitions filed by three Reliance Group employees against an NCLT order.

On this, NCLAT said, “Taking into consideration the nature of the case, we allow the Respondents (Ericsson India) to file their short reply affidavit by February 8, 2019.”

The NCLAT’s order came on Monday, over the urgent mentioning done by three Reliance Group employees – Satish Seth, Punit Garg and Suresh Madihally Rangachar – seeking withdrawal of their appeals against the orders of the Mumbai bench of the National Company Law Tribunal (NCLT).

On May 15, 2018 the Mumbai bench of NCLT had admitted an insolvency petition filed by Ericsson against Reliance Communications and two of its subsidiaries seeking to recover unpaid dues.

However, on May 30 NCLAT granted a conditional stay on insolvency proceedings against RCom and its subsidiaries — Reliance Infratel and Reliance Telecom.

The tribunal had directed RCom and its subsidiaries to pay Rs 550 crore to Ericsson India in 120 days, failing which it will direct insolvency proceedings against the company.

On February 1, RCom had informed that it has decided to opt for insolvency proceedings following its failure to sell assets for paying back its lenders.

RCom even failed to sell spectrum to Mukesh Ambani’s Reliance Jio a deal that was expected to bring some relief to the cash-strapped company.
The Economic Times Reported

ET: Govt submits resolution plan for IL&FS, suggests name of Justice D K Jain to supervise process

4 February 2019: The government Monday submitted the debt resolution plan for crisis-hit IL&FS to the NCLAT and also suggested the name of retired Supreme Court judge Justice D K Jain to supervise the entire process.

The entire resolution process would be based on the principles enunciated in the Insolvency and Bankruptcy Code.

Under the plan, the government has categorised IL&FS group companies into green, amber and red based on their respective financial positions.

The corporate affairs ministry has fixed September 30, 2018 as the cut-off date for entertaining the claims submitted by the lenders. On October 1 last year, a newly appointed board took over the reins of IL&FS.

“During the conduct of the resolution process of the IL&FS group, payments will be permitted only to maintain and preserve the going concern status of the companies of the IL&FS group,” the ministry said in its affidavit detailing the resolution plan.

According to the ministry, it would maintain the waterfall system during asset monetisation, wherein the seniority of lenders would be maintained as is done under the IBC.

“The distribution of the sale proceeds would be in accordance with the waterfall mechanism specified under section 53 of the IBC,” it added.

Under Section 53 of IBC, senior secured creditors loans are cleared first and any surplus that remains thereafter is given to unsecured or subordinated creditors and thereafter to the equity owners.

“… we allow the counsels for Union of India and IL&FS to contact Justice (Retd) D K Jain, for consent and to discuss the terms and conditions of engagement including monthly fee, travelling expenses, allowance etc,” the two-member NCLAT bench said.

The Economic Times reported

 

 

 

BS: Another twist in Essar Steel case as BPCL seeks its liquidation at NCLT

4 February 2019: In a yet another turn to the insolvent Essar Steel Ltd (ESL) case, one of its operational creditors (OCs), Bharat Petroleum Corporation Limited (BPCL), on Monday sought the steelmaker’s liquidation at the National Company Law Tribunal (NCLT)’s Ahmedabad bench.

BPCL objected to the Rs 42,389 crore resolution plan of ArcelorMittal which has been approved by 92 per cent of ESL’s Committee of Creditors (CoC) before NCLT’s two-members bench, consisting of adjudicating authorities Harihar Prakash Chaturvedi and Manorama Kumari.

BPCL’s legal counsel argued that if sent into liquidation, there was possibility for it to recover in full its dues worth Rs 500 crore, since the promoters, whose settlement proposal of Rs 54,000 crore under Essar Steel Asia Holding Ltd (ESAHL) was rejected by CoC, were willing to pay in full to all creditors. BPCL is claiming the dues against Essar Steel’s alleged violation of their take-or-pay gas supply contract since 2016.

“My submission is that NCLT should take Essar Steel into liquidation because it is misplaced assumption that in liquidation it will not fetch the full price. I, as an OC, may get my full due. Buyers may be prepared to pay full under liquidation…if the company need to be taken to liquidation then so be it,” BPCL’s legal counsel told the Ahmedabad bench of NCLT. However, the counsel was quick to add that BPCL was not certain what amount it would eventually get under liquidation.

Countering BPCL’s arguments, the resolution professional (RP)’s legal counsels told NCLT the possibility of creditors getting paid in full under liquidation was thin. “Nobody has challenged the liquidation value of Rs 15,000 crore,” RP’s counsel told the bench.

Under the current liquidation value, none of the creditors will get anything except employees and secured financial creditors, as against ArcelorMittal’s Rs 42,000 crore resolution plan “which will put that money back into the economy”, as per RP’s counsel. Currently, under ArcelorMittal’s resolution plan, any operational creditors with dues worth more than Rs one crore weren’t likely to be paid anything, the counsel added.

Further, challenging BPCL’s claims of dues worth Rs 500 crore as against alleged violation of take-or-pay gas supply contract, RP’s counsel told the bench that this did not fall under the ambit of the resolution plan as it was yet to be decreed as a debt by any authority.

What’s more, RP of L N Mittal’s younger brother Pramod Mittal-led GPI Textiles also sought for quashing of ArcelorMittal’s resolution plan on grounds of non-payment of dues by the latter to GPI textiles worth roughly Rs 300 crore.

While, as per an affidavit submitted with the NCLT, GPI Textiles’ CoC have categorically chosen to not seek such a quashing, the RP’s counsel told Ahmedabad bench that he was acting independent of CoC in public interest. However, the Ahmedabad bench on Monday asked GPI Textiles’ resolution professional (RP) to appear in person to clarify his stance.

On Tuesday, NCLT’s Ahmedabad bench will be hearing Essar Steel’s unsecured financial creditor Standard Chartered Bank (SCB)’s objections to ArcelorMittal’s plan, among other parties.

Meanwhile, the National Company Law Appellate Tribunal (NCLAT) asked to directed NCLT’s Ahmedabad bench to decide on ESL’s insolvency case by February 11. NCLAT said that only after the matter had been heard at NCLT Ahmedabad that it may take up the hearing from February 12 onwards. NCLAT also directed NCLT’s Ahmedabad bench to hear only one representative of all OCs and need not hear them all individually.

Business Standard reported

HBL: Creditors panel approve JNPT’s bid to buy debt-laden Dighi Port

2 February 2019: The Committee of Creditors (CoC) has backed the resolution plan placed by state-owned Jawaharlal Nehru Port Trust (JNPT) to buy the debt-laden Dighi Port Ltd under India’s bankruptcy and insolvency law.

The approval of the lenders panel will be submitted to the National Company Law Tribunal (NCLT) for ratification, at least two people briefed on the decision told BusinessLine.

Adani Ports and Special Economic Zone Ltd and a consortium of Veritas (India) Ltd, Veritas Infra & Logistic Pvt Ltd and Veritas Polychem Pvt Ltd had also filed their resolution plans for the private port located on the banks of Rajpuri creek in Maharashtra’s Raigad District.

JNPT, India’s biggest container gateway, had quoted an upfront amount of more than  600 crores besides capital infusion to continue running the port as a going concern, a shipping ministry official, one of the two persons mentioned earlier, said.

The bid placed by JNPT is a huge hair cut on some  2,628.84 crores that Dighi Port Ltd owes a clutch of 16 banks led by Bank of India (BOI).

Given the low price quotations, the resolution professional for Dighi Port, Shailen Shah, had attempted a Swiss Challenge round to improve the bids to which none of the three bidders responded.

Subsequently, the resolution professional had asked all the three bidding groups to improve their financial quotations, again without success.

“The resolution plan approved by the CoC is the one submitted by JNPT in November,” the ministry official said.

Dighi Port Ltd is promoted by Balaji Infra Projects Ltd and IL&FS Ltd.

For JNPT, the deal makes commercial sense given the constraints to expand further. Dighi is located in the same district as JNPT just a few kilo metres away.

It is also the first instance of a port (JNPT) owned by the Centre buying a private port under the Insolvency and Bankruptcy Code (IBC).

That aside, Dighi fits into its strategy of developing a new hub and spoke model with JNPT at the centre, the ministry official said.

“In India, it’s not easy to set up a port. It takes its own time. Dighi is a ready-made port, plus it’s a stressed asset. So, we are trying to get it a reasonable price, that’s the game,” the ministry official said.

JNPT’s revenues are steady. In some seven years, it will make net profit of over 3,000 crore. So, if the port is making 3,000 crore net profit every year, it must create more asset base by taking advantage of depreciation. If it earns 100 and invest 300 and claim 30 per cent depreciation on 300, there will be zero tax. If it keeps on building assets and pay less taxes, it will be able to earn more,” the official pointed out.

The future of JNPT, he said, is in having a hub and spoke model on the waterside; keep JNPT in the centre, create 3-4 smaller ports nearby and start bringing cargo from those places through waterways.

“Dighi will be a satellite port but dealing with specialised cargo like the cargo which Mumbai Port Trust is not handling now, it will be shift to Dighi. It’s ready business available. South Korean steel-maker Posco is already having business there, coal market is already there. There is ready cargo rest you build up,” the official said.

The Hindu BusinessLine reported

MC: Ruias open new front in Essar Steel race; file fresh application at NCLT

4 February 2019: The Ruias have opened a new front in the much contested Essar Steel.

Prashant Ruia, along with Essar Steel directors have moved the Ahmedabad bench of the National Company Law Tribunal (NCLT) on February 1, citing the January 31 order of the Supreme Court.

The order states that directors of a company facing insolvency should be consulted by the Committee of Creditors (CoC) before arriving at a resolution. The CoC consists of lenders to the insolvent company.

Basing their application on the order, the Essar Steel directors have made four demands:

  • To set aside the decision taken by the creditors to accept ArcelorMittal’s offer;
  • To provide the applicants (the three directors) with all resolution plans submitted by potential applicants, which were considered and deliberated by the CoC;
  • To provide applicants “with such other documents required for proper deliberations of the resolution plans submitted by potential resolution applicants;”
  • and pass appropriate orders to direct the resolution professional to convene a meeting of the CoC and consider afresh resolution plans

The two directors, who are part of the application along with Ruia are: Dilip Oommen, Managing Director and Deputy CEO, Essar Steel; and Rajiv Kumar  Bhatnagar, Director (Projects), Essar Steel.

The NCLT had in January turned down an application by Essar Steel Asia Holdings to submit ts plan to Essar Steel’s creditors.

While ArcelorMittal’s bid of Rs 42,000 crore has the backing of lenders, the Ruias have proposed an offer of Rs 54,000 crore.

Supreme Court’s order

The Apex Court was listening to the insolvency case of Ruchi Soya, the country’s largest edible oil maker that is now in the insolvency courts.

Even as its resolution case was in process, its director Vijay Kumar Jain, who alleged that he was not allowed to participate in the CoCo meetings. While the NCLAT dismissed his plea, Jain appealed to the Supreme Court.

Though the lenders cited  Section 21(2) of the Insolvency and Bankruptcy Code, which says that a “director who is also a financial creditor who is a related party of the corporate debtor shall not have any right of representation, participation, or voting in a meeting of the committee of creditors.”

But the Supreme Court said that the condition only applies to directors who are ‘related’ to the corporate debtor, who in this case are the promoters of Ruchi Soya.

Giving the order, judges RF Nariman and Navin Sinha said:

“The appellants (the director) will be given copies of all resolution plans submitted to the CoC within a period of two weeks from the date of this judgment. The resolution applicant in each of these cases will then convene a meeting of the CoC within two weeks thereafter, which will include the appellants as participants.”

The order then asked the CoC to deliberate the resolution plans afresh.

Ruias’ hope

The order will now give more time in the hands of the Ruias, who are keen to retain Essar Steel, the crown jewel of their conglomerate.

They are yet to challenge the NCLT’s decision to turn down request to consider their proposal.

Sources close to the development said that the promoters are waiting for the cases, related to operational creditors moving the NCLT, to be first sorted.

Meanwhile, the NCLAT has directed the Ahmedabad bench of the NCLT to decide on the Essar Steel case by February 11.

Moneycontrol reported

BQ: IBC: NCLAT Allows JSW Steel’s Revised Bid For Bhushan Power & Steel

4 February 2019: The National Company Law Appellate Tribunal ruled that JSW Steel Ltd.’s revised offer for Bhushan Power & Steel Ltd. is valid under the Insolvency & Bankruptcy Code.

The appellate tribunal was hearing a petition filed against the revised offer by Tata Steel Ltd., the highest bidder for the asset in the first round of bidding. In its revised offer, JSW Steel had bid Rs 19,300 crore for Bhushan Power compared with Rs 19,000 crore offered by Liberty House UK. Tata Steel’s bid is close to Rs 17,000 crore, people in the know said.

Bhushan Power, part of the first 12 large corporate accounts shortlisted by the Reserve Bank of India for insolvency proceedings in June 2017, owes lenders more than Rs 47,000 crore and operational creditors over Rs 700 crore. Punjab National Bank had filed for insolvency proceedings but case has seen considerable delays.

The NCLAT bench headed by SJ Mukhopadhya had reserved the judgment on Dec. after hearing all the parties. The appellate tribunal had ordered all the three bidders to submit revised bids with improved financial offers.

Bloomberg Quint reported

ET: Sanjay Singal makes one last bid for Bhushan Power

4 February 2019: Bhushan Power & Steel’s promoter, Sanjay Singal, has unveiled a last-minute bid to save his company from going under the hammer by offering creditors a proposal to repay their entire dues of Rs 47,151 crore.

The unexpected turn of events comes a day before a judgement is expected in one of the keenly watched insolvency proceedings that began 18 months ago.

Tata Steel, JSW Steel and UK’s Liberty House are vying for the asset which initially generated tepid interest, but has since become a hotly contested one following an operational turnaround that saw capacity utilisation of 90% and sales growth over the past six quarters.

A majority of its lenders had voted in favour of JSW Steel’s offer of Rs 19,300 crore for the company in mid-October.

An appellate bankruptcy court is likely to pick the winner on Monday.

Singhal has become the second promoter after the Ruias of Essar Steel to make such an offer post the introduction of the Insolvency and Bankruptcy Code (IBC), considered a remedy for the ballooning bad debt problem in the banking industry.

In a formal January 29 letter to the two main creditors of the company, State Bank of India and Punjab National Bank, Singhal sought the withdrawal of the insolvency proceedings invoking provisions of Section 12 A of the IBC — it allows for the withdrawal of such proceedings if an expression of interest has not been issued to a prospective buyer. ET has seen a copy of the letter.

His proposal seeks conversion of Bhusan Power’s debt of Rs 47,151 crore from banks into cumulative redeemable preference shares, to be issued to the lenders which they can start redeeming from the beginning of next year.

Singhal promised payment to operational creditors over a period of three years and said claims that were disputed in courts would be cleared once they had been adjudicated upon by the courts. He also promised full payment of arrears to the government, workers and of statutory dues.

A State Bank of India spokesperson said in response to ET’s queries: “It is a policy of the bank not to comment on individual accounts and its treatment.” PNB and Singhal did not respond until press time Sunday to ET’s questions. Mahender Khandelwal, the bankruptcy court-appointed resolution professional for Bhushan Power, said “the matter is sub judice” and declined to comment further.

In his letter, Singhal cited a recent Supreme Court judgement and argued that withdrawal of proceedings was accepted in certain exceptional cases, such as of Brilliant Alloys, even after an expression of interest was issued to a prospective suitor.

He stated that the resolution process was still active as a ruling by the bankruptcy court was still awaited in a dispute between two of the bidders, Tata Steel and Liberty House. “As such, there is no delay and the present proposal under Section 12 A of the insolvency and bankruptcy code is well within time,” he wrote.

Blaming external factors such as cancellation of coal blocks by the top court in 2014 that forced the company to import coal at three times the price, dumping of steel by China and a slowdown in the domestic steel industry during 2014-2017 for the woes at the company, Singhal urged the lenders to consider his proposal claiming that it was in “public interest” and “seeks to meet the objective of maximisation of value”.

Ruias’ proposal to offer a full settlement to Essar Steel’s lenders by repaying Rs 54,000 crore, more than that offered by ArcelorMittal, was recently turned down by the bankruptcy court. The Ruias are widely expected to challenge the decision at an appellate tribunal.

In his letter accompanying the proposal, Singhal claimed that he was “one of the few industrialists who took the business risk for the nation at large … when other much-bigger business houses were disinterested in setting up the plant”, referring to his decision to build a steel factory in a backward district of Odisha 17 years ago.

The Economic Times reported

ET: Ericsson to move Supreme Court to seek seizure of Anil Ambani assets

3 February 2019: Ericsson is set to file an application in the Supreme Court, pleading that all personal assets of Reliance Communications (RCom) chairman Anil Ambani be seized for breaching the top court’s order to repay the Swedish telecom equipment maker.

Ericsson has chalked out options to ensure it gets its settlement amount of Rs 550 crore, people aware of developments said. “Petitioning to freeze personal assets of Anil Ambani is one of them,” one of them told ET. Ericsson did not respond to ET’s queries as of press time Sunday. RCom on Sunday said its asset monetisation plan is still on, indicating its deal with Reliance Jio Infocomm stands. It said it was forced to head to NCLT because it failed to get 100% no objection certificate from its lenders.

Under NCLT, a resolution can be reached with NOC of 66% of the lenders. “RCom’s management will propose a similar debt resolution plan in the…NCLT process, as was earlier being pursued outside NCLT,” the telco said in its statement.

RCom said this includes sale of spectrum and infrastructure assets, monetisation of other businesses like Global Cloud Exchange, India Data Centres and Indian enterprise business, development of 30 million sq ft at the Dhirubhai Ambani Knowledge City complex, and sale of real estate assets.

“Our deal with Jio stands and we should be able to complete it within the latest June end deadline,” a senior RCom official said. Sources within RCom said payments to all operational creditors will be made as per NCLT process.

“Contempt cases against the chairman will continue. As per court orders, Ambani will have to appear on February 11,” said a second person aware of the development. “Applying for bankruptcy is another way of circumventing the top court’s orders to pay us INR `550 crore,” the person said.

The Economic Times Reported

BS:As revival options crash, Reid & Taylor faces liquidation

1 February 2019: As all revival options appeared to fail, and after a crucial hearing in the National Company Law Appellate Tribunal (NCLAT) on Friday, the debt-hit fashion major Reid & Taylor may face liquidation, officials said.

At today’s hearing before the NCLAT, the appellant, Finquest Financial Solutions (FFS) had challenged the NCLT Mumbai’s earlier order asking a Gujarat-based company to participate in the Reid & Taylor’s resolution process, although the statutory 270-day period ended on January 1.

After the Gujarat-based company CFM Asset Reconstruction Pvt. Ltd. (CFMARPL) backed out at the last minute on January 31, the NCLT Mumbai had allowed a New Delhi-based company Indian Gas Ltd. to participate in the Resolution Process.

The NCLAT had issued notices to all parties concerned and kept the matter for hearing today.

Interestingly, the IGL, which was directed by NCLT Mumbai to remain present at the NCLAT hearing today and prove its bonafides by Feb. 5, also failed to turn up, said FFS lawyer Sunil Fernandes.

The NCLAT, frowning at the delays, said in view of the statutory mandate and orders of the Supreme Court, on the issue of 270 days available under Corporate Insolvency Resolution Process, the NCLT Mumbai must complete its proceedings in the matter within two weeks.

The NCLAT also noted the FFS’s senior advocate and ex-law minister Ashwani Kumar’s submissions that “no entity can approach the NCLT for the first time after the expiry of the 270-day period.”

These developments, coupled with several entities backing out or declared ineligible, have effectively ruled out the possibility of revival of the beleaguered Reid & Taylor, sitting on a pile of around Rs 8,000 crore debt, Fernandes pointed out.

“For long, there has been neither a viable resolution plan nor a resolution applicant, and it is difficult that this could be achieved within the next fortnight. The sole course left open for the NCLT Mumbai could be to order Reid & Taylor’s liquidation, within the two weeks granted to it,” Fernandes told IANS.

The NCLAT has listed the matter on the board for the next hearing on Feb 27.

Officials in the FFS – the biggest investor in Reid & Taylor – say that the fate of the around 1,100 employees of the Mysore-based company would be clear only after the NCLT Mumbai’s final verdict.

Promoted by S. Kumars-fame textile tycoon, Nitin S. Kasliwal, Reid & Taylor once boasted of top-notch brand ambassadors such as Hollywood’s Pierce Brosnan and Bollywood’s Amitabh Bachchan.

Since 1999, the company operated a modern plant and machinery in Mysore from where it produced its famous men’s apparels ranging from formal to casuals, but after the financial crisis hit a few years ago, it continued with truncated operations.

–IANS, Business Standard reported