NCLT orders Binani lenders to consider UltraTech offer
03 May 2018
The Kolkata bench of the National Company Law Tribunal on Wednesday ordered the insolvency resolution professional of Binani Cement to accept the revised offer of Rs7,960 crore from UltraTech Cement and place it before lenders for their consideration.
While allowing an unsuccessful bidder to come up with a better offer, the tribunal also provided scope to the Dalmia Bharat-led consortium to raise its bid over UltraTech’s revised offer.The NCLT order sets a precedent for lenders to negotiate with an unsuccessful bidder for maximisation of value under the Insolvency and Bankruptcy Code.
The NCLT Kolkata bench comprising Jinan KR and Madan B Gosavi in its order directed the resolution professional, Vijay Kumar Iyer, to accept the revised bid and place it along with UltraTech’s resolution plan before the Committee of Creditors (CoC) before Saturday, 5 May.
While the Committee of Creditors decided to cling to Dalmia Bharat offer, which was Rs1,022 crore less than UltraTech’s revised offer, NCLT judge Jinan had observed that the objective of the IBC was maximisation of value.
UltraTech had challenged the selection criteria and process by the resolution professional and the CoC in the NCLT and stated that it became H2 bidder because of a wrong gradation system.
It also submitted a revised bid, beating Dalmia Bharat’s offer after closure of the bidding window and also offered to finance Binani Cement in an out-of-court settlement with the lenders.
While the CoC refused all these, UltraTech, on 16 April, further revised its offer to Rs7,960 crore.
The NCLT also directed the lenders and the resolution professional to complete the insolvency resolution process by 24 June.
The tribunal also pointed out that although the process document was not legally binding, nothing prevented the CoC from modifying the process document to accommodate a superior bid from UltraTech, which would pay off all lenders
“The CoC is also directed to reconsider the resolution plan of Rajputana Properties Pvt Ltd (RPPL) if the resolution applicant is willing to raise the offer above the offer of UltraTech,” Jinan said while reading out the order.
RPPL is the partnership firm formed by Dalmia Bharat and Piramal-Bain Capital, which had previously been chosen by the CoC as the H1 bidder. Subsequently, the CoC had issued a letter of intent to RPPL, based on which it had made part of the requisite payment and moved the NCLT for approval of the resolution plan. Dalmia Bharat has a 50 per cent stake in this partnership firm.