Notwithstanding the slow progress in insolvency proceedings frustrating bankers, there are many cases languishing even after they get NCLT’s approval.
Take the case of JSW Steel’s bid for Vardhman Industries.
The resolution plan approved by the National Company Law Tribunal in December has an insertion stating that the lenders will have claim on ₹50 crore receivable of Vardhman in addition to the bid amount paid by JSW Steel.
Similarly, the approved plan has left it to the Income Tax department to waive off the ₹8-crore claim on the company.
Objecting to both the insertions, JSW Steel has already withdrawn its nominee from Vardhman board.
JSW Steel had agreed to pay ₹62.5 crore to the financial lenders and ₹1 crore for operational creditor. It has also agreed to infuse ₹63.5 crore as equity or debt in the stressed company.
The additional ₹50 crore, which the company has to receive from its vendors/suppliers, would have accrued to JSW Steel had the new clause was not inserted.
Both the demands in Vardhman case are contrary to other NCLT cases where the tax liability is extinguished as on the date of reference.
Seshagiri Rao, Joint Managing Director, JSW Steel, said the company is waiting for NCLT’s direction on operational guidance and the deal is subject to clarification on the contentious issues.
In the erstwhile BIFR era, he added, all the tax liability was extinguished on the date of approval.
Other litigations
Similarly, UK-based Liberty House winning bid to take over Adhunik Metaliks and Amtek Auto is stuck in litigation even after securing NCLT’s approval.
In the case of Adhunik, State-owned MSTC (Metal Scrap Trade Corporation) has filed for a claim of ₹100 crore to be included as part of the CIRP (corporate insolvency resolution process).
Lenders have been pressing for payment from Liberty House at NCLT-Kolkata even as NCLAT is considering MSTC’s claim.
The resolution process of Amtek Auto is also not moving forward as Liberty House has alleged there is a mismatch in the information memorandum and inflated valuation of assets.
The Delhi-based auto component company was dragged to the tribunal by group of lenders led by Corporation Bank to recover dues worth ₹12,600 crore.
Liberty House had agreed to pay ₹3,225 crore to creditors and pump in ₹500 crore into the company.
The resolution plan was approved by CoC last April with a 94 per cent vote.