Concerns raised. HNG Insolvency matter: Uganda billionaire tells CoC they were treated unfairly

Independent Sugar Corporation (INSCO), Uganda’s largest corporate-led by billionaire NRI family the Madhvani Group, has raised concerns about being short-changed in a deal to buy India’s oldest glass-making company Hindustan National Glass and Industries (HNG). Sources involved in insolvency proceedings told businessline that INSCO has informed the Committee of Creditors (CoC) that they were asked to first get clearance from the Competition Commission of India (CCI) even though another company who is yet to get CCI clearance has been allowed to bid.

On Tuesday, HNG informed stock exchanges that a resolution plan involving a bid by AGI Greenpac was submitted to the National Company Law Tribunal (NCLT) on November 5. An application by AGI Greenpac to the CCI was not cleared yet.

INSCO offered ₹1,850 crore upfront cash, ₹50 crore to trade creditors workman and 5 per cent equity to creditors of HNG. Also, it secured a nod from CCI to bid. But still, the resolution professional and CoC approved a bid by AGI Greenpac, whose CCI application was pending. Before the CCI approval came the final resolution plan was already submitted to the NCLT by the officials involved. AGI offered ₹1,851 crore upfront, ₹5 crore to trade creditors and ₹350 crore deferred payment.

Usually, the bidder, whose plan is accepted by the resolution professional and CoC should have CCI clearance. “We view this as a preferential treatment meted out to AGI, which is not in the spirit of request for resolution plan and the resolution process,” INSCO told CoC.

On August 25, Girish Juneja, the RP wrote to the bidders stating that they should try to obtain a CCI nod before the filing of the final resolution plan.

“Considering available jurisprudence and the time that may be consumed in pre-consultation with CCI to obtain such approval, the RFRP grants relaxation to the resolution applicants to procure the CCI approval post the approval of resolution plan by the COC but prior to the filing of the plan approval application before the adjudicating authority.

However, it is clarified that the resolution applicants must endeavour to obtain the necessary approval from CCI prior to COC approval of the resolution plan,” Juneja’s email said. The plan involving AGI Greenpac was submitted to NCLT four days ahead of the deadline of November 9.

Sourasubha Ghosh, Partner, IndusLaw said, “Surprisingly, the RP or COC did not follow the deadline under the IBC and RFRP for successful bidder to obtain CCI approval prior to COC voting on the plan. CCI had termed AGI’s application as not valid on October 22. Even the limited relaxation given by RP to applicants to obtain CCI approval before filing the approved plan with Adjudicating authority was not followed in respect of AGI. This raises serious questions over the fairness of the process and AGI’s plan can be challenged on this ground. It may depict preferential treatment being given to AGI and it sets a wrong precedence for future Insolvency cases and may discourage participation.”

Media queries to RP and CoC remained unanswered. AGI said, “We were selected by COC for HNG’s acquisition with 98 per cent votes. AGI applied to CCI for its approval on September 26 and CCI has asked for additional information by way of Form II, which is procedural and was filed on November 3. Significant to note that our application has not been rejected by CCI. Seeking CCI nod post CoC approval is not unusual or unique.”

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