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The out-of-court deal between UltraTech and Binani Industries seems headed towards fruition, with the latter offering to pay its lenders the entire debt of ₹7,200 crore if they withdraw the insolvency proceedings against it.
Binani will meet its creditors on Wednesday with the proposal. If it is accepted, UltraTech will inch closer to acquiring Binani Cement under an agreement announced recently.
The development comes even as the National Company Law Appellate Tribunal on Tuesday directed the creditors and the company to consider an amicable settlement on the issue. “We give liberty to parties to reach (a) settlement and approach (the) appropriate forum for final approval of the settlement,” said NCLAT, while hearing a petition filed by Binani Industries, the promoter of Binani Cement.
Sameer Kaji, Legal Advisor, Binani Cement, said it was now clear that the company’s offer to repay the entire debt is valid and has to be considered in the interest of all creditors. “We will make a submission to creditors on Wednesday and hopefully it will be accepted,” he added.
On Monday, the NCLAT had set a deadline of April 9 for the Committee of Creditors (CoC) to hear Binani’s application for an out-of-court settlement. However, the CoC has already declared Dalmia Bharat Cement the highest bidder for Binani Cement and also accepted a bank guarantee equivalent to 10 per cent of the bid amount. Both Dalmia Bharat and UltraTech had bid for Binani Cement under the insolvency process, but the former was declared winner.
Mahindra Singhi, Group CEO, Dalmia Cement Bharat, said the NCLAT was clear that an amicable solution should be arrived at among all parties, which also includes Dalmia Cement. “I am sure the creditors’ committee will consider the legal provisions of the Insolvency and Bankruptcy Code (IBC) before arriving at a final decision on striking an out-of-court settlement,” he added.
Earlier, the creditors had rejected Aditya Birla Group company UltraTech Cement’s bid for Binani even after the company raised its offer by ₹700 crore to ₹7,266 crore. Circumventing the NCLT proceeding, UltraTech signed an out-of-court deal with Binani Cement to buy out 98.43 per cent for the sum if insolvency proceedings were withdrawn.
IBC under stress
The case will test the new insolvency rules because it places the lenders in a dilemma. While it will be beneficial for creditors to accept UltraTech Cement’s higher offer, it will raise doubts on the entire insolvency resolution process if counter-bids are allowed through bilateral agreements.
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