A visitor holds paper work and checks documents (Photographer: Krisztian Bocsi/Bloomberg)

Edelweiss ARC Lodges Complaint Against Synergies Dooray Resolution Professional

Edelweiss Asset Reconstruction Co. Ltd has filed an official complaint against resolution professional Mamta Binani in the Synergies Dooray Automotive Ltd. insolvency case.

According to the complaint submitted by the asset reconstruction firm to the Insolvency & Bankruptcy Board of India (IBBI), Binani acted in a partisan manner and did not adequately investigate the fraud perpetrated by Synergies Dooray.

The complaint comes after the National Company Law Tribunal (NCLT) approved an insolvency resolution plan for the automotive components manufacturer on August 2. The plan mandated that the creditors to Synergies Dooray take a 94 percent haircut to their total exposure in the company. Edelweiss ARC is also objecting to the NCLT decision in the matter through an appeal at the National Company Law Appellate Tribunal (NCLAT).

BloombergQuint is in possession of a copy of the complaint letter sent to the IBBI.

She (Binani) has behaved opposite to all norms, standards, ethics and best practices expected of an IRP/RP, while performing her duties. She also did not act diligently and prudently by choosing not to seek expert legal advise to guide her and obtain clarity on her role as IRP/RP of the corporate debtor in deciding admissibility of claims, investigating fraudulent transaction, deciding related party issue. 
Edelweiss ARC Complaint To IBBI

According to Edelweiss ARC, Synergies Castings Ltd—which originally held a majority of the debt in Synergies Dooray and Millennium Finance Ltd, the non-banking finance company (NBFC) to which said debt was transferred—are related parties in the insolvency process and could not take any decisions on the final resolution plan.

Also Read: Has India’s First Insolvency Resolution Approval Set A Dangerous Precedent?

The ARC claims that Binani did not act upon this information, even though she was informed of it through a letter by Edelweiss ARC on February 20. In her response to the ARC’s letter, Binani stated that she is not conducting upon contentious issues of facts and law and was required to verify the claims made by creditors only on the basis of records and documents placed before her.

According to the complaint submitted by Edelweiss ARC, it holds Rs 88.92 crore worth debt in the Synergies Dooray matter, while Millennium Finance holds Rs 749.63 crore, out of the total Rs 1,063.57 crore worth debt.

Also Read: Supreme Court Allows Insolvency Resolution Professional To Take Over Jaypee Infratech Management

The Synergies Dooray insolvency case has been widely tagged as the first matter in which the NCLT has approved a resolution plan. The Insolvency and Bankruptcy Code intends to resolve cases of corporate insolvency and reduce the burden of banks exposed to such cases.

Resolution professionals are required to take over the board functions of a firm admitted under the insolvency process and work with the lenders to submit a resolution plan within 270 days of admission.

According to data collated by global consultancy firm EY in a report released last month, there were 222 insolvency cases admitted at various benches of the NCLT across the country, as on August 24. More than 900 insolvency professionals are registered with the IBBI, the report noted.

MS Sahoo, chairman of the IBBI, told BloombergQuint that while the board has received the complaint from Edelweiss ARC, he would not be able to comment on any of the proceedings undertaken thereafter. However, Sahoo did clarify that the IBBI takes complaints seriously and conducts a through investigation in such matters. If found guilty of any malpractice, a resolution professional could be subjected to penalties, Sahoo said.

The punishment for RPs may range from cancellation of licence to even monetary penalties.
MS Sahoo, Chairman, IBBI

While talking to BloombergQuint, Binani said that Edelweiss ARC has been consistently raising issues with some specific aspects of the case and her actions in the resolution process. However, the Hyderabad bench of the NCLT, which heard the Synergies Dooray insolvency matter has categorically dismissed all of Edelweiss ARC’s objects, Binani said.

I would just like to mention that all the issues being raised by Edelweiss in different forums on varied occasions had been raised by it by way of dedicated applications to the Honourable NCLT, Hyderabad Bench during the process of CIRP itself...the Honourable NCLT passed a speaking order mentioning inter-alia that after carefully seeing all of it, the applications filed by Edelweiss stands dismissed cause it has no merit.
Mamta Binani, Resolution Professional
BloombergQuint
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