The National Company Law Tribunal has dismissed an Odhisa order that had sought the stoppage of mining activity at Orissa Manganese & Minerals, giving a fresh lease of life to the Adhunik group company that faces Rs 5,400 crore in unpaid debt claims at the insolvency court.
The latest court order will help the bankrupt company obtain higher valuations from potential buyers.
“Stoppage of Patmunda manganese ore mines operations… while the moratorium is in force is illegal and inoperative,” said Jinan K R, the court judge at the tribunal’s Kolkata chapter. “In view of the above, the application filed by the Resolution Professional is liable to be allowed.”
Sumit Binani, the resolution professional, moved the NCLT against the Odisha state government order as stoppage of operations goes contrary to the ‘going concern’ concept that normally elicits higher interest from potential bidders.
The corporate borrower has a mining lease at Patmunda Manganese Mines, which helps the company being run as a “going concern”, a key factor for any acquiring entity. The mines engage about 1,000 workers and labourers.
The State Bank of IndiaBSE -1.24 % is the lead lender, which dragged the company to the dedicated bankruptcy court in Kolkata during August last year.
The Director of Mines of Odhisa has ordered stoppage of mining operations due to non-payment of compensation in leased mines. The state government body cited a Supreme Court case between Common Cause versus Union of India and others in claiming the sum.
The claim apparently was made for another leased mine and not the Patmunda facility, said a person present in the court.
Binani has produced evidence that the company has already paid Rs 12.07 crore for Patmunda mines as compensation.
Two respondents – the director of mines, Khurda district and deputy director of mines at Sundargargh district – have been directed to lift the embargo immediately
Kolkata-based Adhunik Group has received about 15 to 20 separate expressions of interest (EoIs) collectively for its four struggling resources and metals companies that now await the resolution of Rs 5,000 crore in debt and claims at dedicated insolvency courts.
Adhunik Alloys and Power, Adhunik MetaliksBSE -4.74 %, Zion Steel, and Orissa Manganese and Minerals await resolution under the bankruptcy code, and several rivals, such as Sunflag Iron and Steel, Kalyani SteelBSE 0.69 % and Rashmi Steel showed interest in the businesses, ET reported in January.
Source: Economic Times