by admin | May 25, 2021 | Commodity Market, Corporate, Corporate Buzz, Economy, Finance, Investing, Markets, News
New Delhi : D Day has arrived yet again for Reid & Taylor at the National Company Law Tribual (NCLT), with its next hearing slated for February 5 in Mumbai. This is when the fate of the latest bidder Indian Gas Ltd will be decided.
During the hearings, the NCLT Bench has thrown into stark relief that they now don’t believe the Employee Association at all and are even extremely suspicious that there is a definitive effort to sabotage the process of resolution.
In the continuing saga replete with twists and turns by way of bids and withdrawals to participate in the CIRP for Reid & Taylor, despite time of statutory 270 days period having elapsed, Indian Gas Ltd with its last minute bid informing the Bench that the company, which has Rs 1,500 crore net worth, is in the hunt. But recent history may well repeat itself on Tuesday when the new bid is turned out.
The reason being that records of Registrar of Companies reveal that Indian Gas Ltd has total shareholders’ funds of Rs 5,72,31,856 and share capital of Rs 6 crore as on March 31, 2018, according to the Balance Sheet for FY 2017-18.
On closer examination into the internal financials (paid up capital) of the group entities associated with one of the Directors of Indian Gas Ltd, Thamburaj Mohan including Indian Power Projects Ltd (Rs 5 crore), MRC Services Pvt Ltd (Rs 9 lakh), Indian Gas Ltd (Rs 6 crore), Indian Integrated Energy Ltd (Rs 10 crore), Thamara Green farms Pvt Ltd (Rs 1 lakh), Thithukudi Green Farms Pvt Ltd (Rs 1 lakh), Nellai Dry Land Agro Farms Pvt Ltd (Rs 1 lakh), IMP Infra Holding Pvt Ltd (Rs 1 lakh), Venthan Enterprises Pvt Ltd (Rs 1 lakh), MRC Green Energy Pvt Ltd (Rs 1 lakh) amounting up to about Rs 21.15 crore in all.
In reality, in its submission through Rinav Manseta, Indian Gas Ltd had informed the NCLT Mumbai Bench of having a net worth of Rs 1,500 crore.
Another investor SPGP had earlier this month claimed a net worth of Rs 67 crore but eventually could prove a net worth of a meagre Rs 6 crore and then backed out apologizing to the Bench for the company’s inability to participate in the Resolution Process.
The NCLT Mumbai Bench during the hearing had said that only due to the humanitarian angle they had considered a smallest opportunity that was available to the company to revive itself even after the statutory deadline of 270 days had passed.
In the last hearing, the NCLT Mumbai Bench had noted that if the investor (Indian Gas Ltd) fails to deposit non-refundable EMD of Rs 2 crore by February 5, it will be construed that the said the person representing Indian Gas Ltd had made false statements for obtaining adjournment for which they may proceed against this person under section 420 of IPC.
Finquest had opposed the claim of Indian Gas Ltd to participate in the Resolution Process of R&T saying the time of statutory 270 days period should not be extended under any circumstances. Its counsel Zal Andhyarujina said that its client feels that Indian Gas has not come to NCLT with genuine interest.
In one of the hearings, on the issue of KPMG forensic report, the Bench noted that there is no doubt that there was fraud committed by the erstwhile promoters in the company. The Bench had then observed that there was a clear case of fraud that can be treated under IPC also and if required, the Bench can request the police and other authorities to look into it and initiate suitable proceedings.
—IANS
by admin | May 25, 2021 | Corporate, Corporate Buzz
Ahmedabad : The National Company Law Tribunal (NCLT), Ahmedabad bench, on Tuesday rejected the Essar promoters plea to repay their debt and withdraw Essar Steel from the insolvency proceedings, giving advantage to ArcelorMittal in the race.
Within days of the Supreme Court ruling on Section 12A of the Insolvency and Bankruptcy Code (IBC) clarifying that promoters can take back control of their insolvent company with the approval of 90 per cent creditors’ vote share, the tables have turned for Essar promoters.
The two-member Ahmedabad bench, which on January 7 had reserved its judgement on the maintainability of Essar’s arm Essar Steel Asia Holdings Ltd (ESAH) seeking withdrawal from the resolution process, gave its verdict on Tuesday rejecting the promoter’s plea.
The NCLT also said that there is no illegality in the decision taken by the Committee of Creditors (CoC) on selecting ArcelorMittal.
The bench said only the applicant who had initiated the insolvency proceedings can seek a withdrawal. The State Bank of India and Standard Chartered Bank had moved the bankruptcy court against Essar Steel.
ESAH had offered to pay Rs 54,389 crore for settlement to retain its control of the company after ArcelorMittal’s proposal of Rs 42,202 crore was approved by the CoC. Now, the NCLT will decide on the resolution plan of ArcelorMittal on January 31.
“We welcome today’s ruling by the NCLT which protects the integrity of the IBC and ensures its legitimacy as a rules based law. This is a positive development for both Essar Steel India and the country more broadly. We hope now for a swift resolution to this case,” ArcelorMittal said in a statement.
While this may finally close the insolvency proceedings in favour of ArcelorMittal, the Essar Group maintains that their offer is better as it can pay all the creditors and that the objective of the IBC is value maximisation.
“We continue to believe that our offer of Rs 54,389 crore is the most compelling proposal available to Essar Steel creditors. It seeks to repay all classes of creditors and fulfils the IBC’s overriding objective of value maximisation that has been established time and again by courts at all levels.
“We submitted the proposal under the recently introduced Section 12A of the IBC and the recent judgement of the Supreme Court has established that the section’s provisions are applicable retrospectively,” Essar Group said in a statement hinting at the recent Supreme Court clarification allowing promoters to withdraw from the insolvency process at any stage.
“We are awaiting a copy of the full NCLT order, and will take a call on next steps after we have thoroughly gone through the contents,” Essar said.
It is likely that the Ruias will now approach NCLAT or even move the Supreme Court against the NCLT’s order rejecting their plea.
—IANS
by admin | May 25, 2021 | Corporate, Corporate Buzz, Investing
Cyrus Mistry
Mumbai : In a significant ruling, the National Company Law Tribunal (NCLT) on Monday upheld the October 24, 2016 decision of the Tata Sons Board of Directors dismissing its then Chairman Cyrus Mistry.
While Mistry’s office termed the tribunal decision as “disappointing”, hinting they would approach the higher tribunal, Ratan Tata, Chairman of Tata Trusts called it as judicial “forthrightness”.
“The judgement of the NCLT, delivered this morning has been a vindication of the actions that Tata Sons felt obliged to take in October 2016. It is a reinforcement of the principles and forthrightness that prevails in our judicial system, which should make all of us proud of our country and its democracy,” said Tata in a statement.
“The judgement has only re-affirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders. The Tata Group has always been committed and will continue to be committed to transparency and good corporate governance of global standards,” said Tata Sons Chairman N. Chandrasekaran in a statement.
“Tata Sons hopes that a finality will be given to the judgement of NCLT, Mumbai by all concerned in the larger interest of companies, the shareholders and the public,” Chandrasekaran added.
But finality is unlikely immediately. “The ruling of the National Company Law Tribunal is disappointing although not surprising. We will continue to strive for ensuring good governance and protection of interests of minority shareholders and all stakeholders in Tata Sons from the wilful brute rule of the majority,” office of Cyrus Mistry said in a statement.
The NCLT ruled that the Tata Sons board of directors was competent to remove the executive Chairman and that Mistry was ejected as the board members had lost confidence in him.
Rejecting Mistry’s plea to reinstate him on the Board of Tata Sons, the NCLT pointed out that he (Mistry) had openly gone against the Board, and hence against the company.
The much-awaited verdict of NCLT Mumbai by a Special Bench comprising B.S.V Prakash Kumar and V. Nallasenapathy came in a petition filed by Mistry after he was abruptly ousted as the Tata Sons Chairman, creating an upheaval in the Indian corporate world.
Mistry later quit from the board of six other Tata Group companies but challenged the Group and his successor, the former Interim Chairman Ratan Tata’s decisions, before the NCLT.
The petitioners, Cyrus Investments Pvt. Ltd and Sterling Investments Group of the Shapoorji Pallonji Group had filed the plea against the Tata Sons directors and trustees of Tata Trusts, alleging among other things, abuse of articles of association by outsiders, breakdown of governance and loss of ethical values.
“The ruling is in line with the earlier position expressed by the Tribunal. An appeal on merits will be pursued. Matters like TTSL, Air Asia, recovery of dues from Siva, non-closure of a loss-making Nano, a struggling resolution of Tata Steel Europe, all present serious issues that will be pursued. Not only the facts that were under consideration but also subsequent facts and developments that continue to evidence oppression and mismanagement will be under scrutiny and will be pursued in full earnest,” the official statement from Mistry’s office said.
“Ours has always been a principled fight to restore the Tata Group to its glorious days of high standards, best practices and most importantly, the best value systems. In this journey, no matter how hard it may seem, as shareholders who have always supported the Tata Group, it remains our duty to protect the Tata Group from those were destroying value and making the Group vulnerable to external forces,” it added.
Official sources indicated on Monday that Mistry is likely to challenge the NCLT verdict before the National Company Law Appellate Tribunal, New Delhi.
They further contended that Mistry was sacked as Chairman and later as Tata Sons director as a result of “oppression by promoters who are in turn owned by Tata Trusts that owns over 68 per cent in Tata Sons”.
The petition also listed how the Articles of Association “were violated and misused to give powers to the majority shareholders to subvert the interests of the minority shareholders and interests of the company.”
Alleging “massive revenue losses” for the Group owing to the alleged mismanagement by Tata Sons board and Ratan Tata, the petition sought to point out Ratan Tata’s relationship with C. Sivasankaran and his companies, which resulted in providing them with ex-gratia favours’ without any ‘quid pro quo’ for the Tata shareholders or their group companies. It had also sought a forensic audit into such dealings.
Accusing trustees of Tata Trusts — Ratan Tata and Lord Kumar Bhattacharya — of regularly reviewing the operations of various Tata Group companies though not being directors in any, the petition claimed violation of Insider Trading Rules by giving them access to price sensitive information.
A similar demand was made for forensic audit into the alleged fraudulent transactions of Rs 22 crore between Deloitte Haskins & Co, with Air Asia India with non-existent parties in India and Singapore.
Contending another example of oppression by Mistry, the petition claimed that during the course of the NCLT hearing, the Tata Sons board sought to convert it into a private company.
However, the NCLT dismissed all the allegations and rejected Mistry’s plea to reinstate him on the Tata Sons Board.
Arguing for the Tata Group, its counsel Abhishek Manu Singhvi told the NCLT that Mistry was appointed at the behest of Tata Trusts and his removal cannot be questioned by minority shareholders and he was removed as per provisions of the law by seven out of nine directors in which Mistry did not vote for his removal and one director abstained.
Singhvi argued that Mistry was removed because the Tata Sons Board had lost confidence in him, as he had intentionally and in bad faith, “leaked sensitive and confidential information” which eroded Tata Group’s market value.
—IANS
by admin | May 25, 2021 | Corporate, Corporate Governance, News
New Delhi : The Supreme Court on Wednesday stayed an NCLT order suspending real estate major Unitech’s directors and allowing the Centre to appoint its nominees in their place.
A bench of Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice D.Y. Chandrachud stayed the December 8 order of the National Company Law Tribunal by which it had suspended nine directors of the Unitech and allowed the government to appoint its nominee directors.
At the outset of the hearing, Attorney General K.K. Venugopal regretted the government’s moving the tribunal without first approaching the top court.
In view of Venugopal’s statement, the Chief Justice in a brief order said: “We direct the stay of the December 8 order of NCLT…”
The apex court was told by Unitech on Tuesday that the NCLT could not have passed the December 8 order in view of the Supreme Court’s October 30 order that said “no coercive steps would be taken against Unitech”.
The top court by its October 30 order had directed Unitech’s promoter Sanjay Chandra to deposit Rs 750 crore by December end – a condition for his release from jail.
By the same order, the top court had also refused to interfere with other proceedings going on before other judicial forums with a rider that no coercive action would be taken against him for the execution of orders passed by them.
The principal bench of the NCLT by its December 8 order had suspended eight directors of the Unitech and restrained them from functioning.
It had further restrained them from “alienating, mortgaging, creating charge, or lien, or interest in the properties owned by them personally or that of the company till the conclusion of investigation as ordered by it on October 6, 2016.
The government had moved the NCLT under Section 241(2) of the Companies Act, 2013 for taking over the management of the Unitech in public interest.
Section 241(2) of the Companies Act says: “(2) The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, it may itself apply to the Tribunal for an order under this Chapter.”
This is the second occasion when the government has taken recourse to the Section 241(2) for taking over the management of an embattled company.
Chandra and his brother Ajay were arrested in April after investors, who did not get flats in the company projects as promised, filed complaints of cheating against them.
They were sent in judicial custody after the trial court refused to extend the three-month interim bail granted to them in April.
The Delhi High Court too, refused to extend the interim bail that ended on August 10.
—IANS
by admin | May 25, 2021 | Banking, Corporate, Corporate Buzz, News
Kolkata : Bankers on Saturday said they are betting on the Insolvency and Bankruptcy Code and the process of National Company Law Tribunal for getting quick resolutions in order to solve the problems of bad loans.
“The Insolvency and Bankruptcy Code, 2016 is a game-changer,” State Bank of India’s Managing Director (National Banking Group),Rajnish Kumar said, adding that it will greatly increase the pace of resolution of stressed assets.
NCLT process is the new one and not matured but it provides a quick mechanism for getting resolutions for the stressed assets, bankers said, adding that the restructuring of bad loans, under the previously floated models, were tried to get rid of the problems but earlier models did not solve many problems.
“With the guideline of earlier restructuring models (S4A, 5/25 and others), the lenders tried their best to solve the bad loans issues. Some of the stressed accounts were addressed but some bigger problems were not solved. The NCLT and IBC is an improved version. The response under the process is so far so good,” Bank of India’s MD and CEO Dinabandhu Mohapatra said at an event organised by CII here.
His UCO Bank’s counterpart Ravi Kishan Takkar also said the banks are looking forward to NCLT process.
“The primary objective for the NCLT process is to get the resolution, not liquidation. Lot things are in place under the NCLT process. In the earlier models, banks could not take sufficient calls. In NCLT, banks can take higher haircuts,” he said.
The Reserve Bank of India had identified 12 large accounts with exposure of more than Rs 5,000 crore and more than 60 per cent of which was recognised as non performing assets (NPAs). Banks have to refer to the IBC for these accounts. The apex bank further identified more stressed accounts for which the insolvency process needs to be initiated.
High NPA ratio had existed earlier, too, Kumar said, adding that the main purpose of NCLT is not liquidation but resolution. Currently, there are 11 NCLT benches across the country and 25,000 insolvency cases were pending. Since the resolutions need to happen in a time-bound manner, the number of benches would have to be increased, he said.
However, the bankers said fresh slippages to bad loans have been slowing up.
“Almost all the bigger stressed accounts are addressed or booked. The banks have covered the problem areas, June quarter results of the bank showed the fresh slippages were not growing. That indicates the bigger (stressed) accounts were booked,” Mohapatra said.
Slippages have slowed down but overall NPAs would go up to some extent in the coming quarters, Takkar said, adding that subdued credit off-take was a concern for the industry.
—IANS
