There are doubts about the creditor’s role in bidding the Binani Cement. This was evident when the National Company Law Tribunal’s (NCLT) Kolkata Bench established a two-member panel to find out the truth. The takeover of the cement firm has attracted 14 petitions before the tribunal’s bench alone. As the 270-day timeframe is set to expire in a day, there are four cases that are yet to be hard while two were heard partly.
Doubts About Changing the Process
The doubt is in respect of Binani Cement Committee of Creditors’ (CoC) role and whether it could have played any part in changing the document process to think about the UltraTech Cement’s resolution plan. The committee has favored the Dalmia Bharat-led consortium’s plan, Business Standard reported. As the NCLT is yet to approve the plan, the tribunal has advised the professional to continue to manage the company until further instructions from it. The tribunal has to hear every petition in the case before making any conclusion on the resolution plan of CoC.
The arguments put forward by the stakeholders were clear. It has acted based on the guidelines given by the Central Vigilance Commission (CVC) with references from Indian Bank Association and others. Accordingly, the stakeholders submitted that it had selected Dalmia Bharat led consortium as the highest bidder which was is in line with the process document outlined by lenders. The doubts have come after UltraTech Cement questioned the resolution process followed by the professional and CoC.
The CoC’s legal wing pointed out that the Insolvency and Bankruptcy Code (IBC) and evolving process to impress that they have to look at the common law to fill the grey areas. On the other hand, a member of the Kolkata Bench, K.R. Jinan, wanted to know whether there was anything wrong in modifying the process document so that it could allow the revised bid from UltraTech Cement to consider it. Incidentally, the Aditya Vikram Birla-controlled firm has shown interest to boost its bidding price.
UltraTech’s counsel also wanted to know the reasons behind in not modifying CoC’s own process document since UltraTech Cement offered monetarily superior offer. He also pointed out that the objective of IBC is optimizing value. On Thursday, the Bench wanted Dalmia Bharat counsel whether any laws have prevented the committee from making changes to the process document.
No Change in Document
For their part, the CoC and Dalmia-Bharat maintained that once the insolvency proceedings started, there was no provision for changing the document. That was because it has the potential to create ambiguity for future cases in the tribunal. On the other hand, UltraTech pointed out that for tenders, CVC guideline was used.
Manu Rohatgi, who was arguing in favor of UltraTech, pointed out that the guidelines for IBC and CVC are entirely different. He said, “It is like trying to fill a circle with a square.” He also failed to understand the logic of negotiating only with Dalmia Bharat when the objective is the maximization of value. The counsel for H1 indicated that new bids could not be placed and that modifications or alterations to a submitted plan could not be entertained without the approval of the CoC.
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