(Source: BloombergQuint)

Binani Cement Insolvency: Rules Can’t Be Changed For One Company, Creditors Say

The battleground for Binani Cement Ltd.’s insolvency process has shifted back to the National Company Law Tribunal, Kolkata. Last week, Binani Industries Ltd. withdrew its petition seeking termination of the insolvency process for its debt-ridden cement unit that would have allowed an out-of-court settlement with UltraTech Cement Ltd.

At the second day of hearing before the Kolkata NCLT bench today, the resolution professional for Binani Cement argued that at the tenth meeting of the committee of creditors, 90 percent members had supported Dalmia Bharat’s bid. After this meeting, Dalmia Bharat was declared as the highest bidder and Exim Bank had not objected to it, he added.

Yesterday, Exim Bank – an unsecured financial creditor of Binani Cement– had argued that it had voted on the resolution plan under protest and that the resolution professional had failed to include UltraTech Cement Ltd.’s revised bid in the agenda. To this, the resolution professional responded that he cannot set the agenda for creditors’ committee meetings.

The bench observed that the resolution professional, while exercising his statutory powers, should’ve opted for profit maximisation and that the committee of creditors had time to consider UltraTech’s offer before they finalised the highest bid. The creditors’ committee responded that it followed the Central Vigilance Commission’s guidelines on closed bids and decided to only negotiate with the highest bidder. It argued that the insolvency process gives 270 days to finalise a resolution plan and the rules cannot be changed for one company. The resolution professional added that any delay to this 270-day timeline would increase the cost of insolvency proceedings.

The counsel for Dalmia Bharat submitted that the creditors’ committee cannot accept any changes to resolution plans once the highest bidder is selected and that negotiations can’t be done with more than one bidder.

The hearing will continue before the Kolkata NCLT tomorrow.

(With inputs from Ishadrita Lahiri)