The parallel deal that insolvent Binani Cement Ltd. struck with UltraTech Cement Ltd. bypassing the bidding process at National Company Law Tribunal is a “legal nuance” that needs to be fixed.
That’s according to Anil Singhvi, managing director of proxy advisory firm Ican Advisors, who finds the whole case “intriguing”. “I think it is really challenging the Insolvency and Bankruptcy Code's process,” Singhvi told BloombergQuint in an interview.
I hope the NCLT, the appellate tribunal and Supreme Court lay it down that you cannot run through the whole IBC process and then draw a blank, that this whole process was not required because someone is willing to buy the entire stake.Anil Singhvi, MD, Ican Advisors
Singhvi has been a longstanding adviser to venture capital firm True North, which was part of a consortium that also bid for Binani Cement. There were six bidders in the first round.
Yesterday, Binani Industries announced that it will apply to the NCLT seeking termination of the insolvency process that its cement arm is currently undergoing. That after the company entered into an agreement with Aditya Birla Group-owned UltraTech to sell 98.43 percent stake in Binani Cement for Rs 7,266 crore.
As part of the insolvency process, UltraTech had increased its offer for Binani Cement after Dalmia Bharat emerged as the highest bidder. The Committee of Creditors, however, on March 15 approved the rival bid by the investor group led by Dalmia Bharat and backed by Bain Capital. UltraTech then approached the NCLT.
If UltraTech had the appetite for Binani Cement, they could have offered more money in the first place, Singhvi said. “It's a complete waste of time.”
If they (UltraTech Cement) really wanted to buy Binani Cement by offering Rs 7,000 crore which they’re putting on the table, what prevented them from first putting out this cheque and not let this entire process run?Anil Singhvi, Managing Director, Ican Advisors
There is a possibility that Ultratech, through this side deal, could be seen as being complicit with the insolvent promoter, Singhvi pointed out. “That has to be tested legally because the amendment was very clear that promoters cannot be participating directly or indirectly in the bidding process,” he added.
Watch the full interview here.
Correction: An earlier version of this story has been corrected to include that Anil Singhvi has been a longstanding adviser to venture capital firm True North, which was part of a consortium that also bid for Binani Cement.