India’s dedicated bankruptcy court Thursday approved a resolution plan for Uttam Galva Metallics and Uttam Value Steels, paving the way for their lenders to get back about Rs 2,700 crore – or nearly 37 per cent of the total claims.
Bids were submitted by US-based CarVal Investors and Nithiya Capital Resources Advisors. The resolution plans involve settlement to financial creditors of Uttam Value Steels with a total upfront and contingent payment of Rs 1,078 crore and Rs 1,576 crore for Uttam Metallics.
“The resolution plans filed against the respective companies by the resolution applicants Carval Investors LLP, New York and Nithiya Capital Resources Advisors LLP…being approved by the respective CoC’s with requisite majority i.e. with 88.9 per cent votes,” read the order by the National Company Law Tribunal (NCLT).
Lenders to Uttam Galva Metallics had submitted claims worth Rs 4,263 crore, of which Rs 4,176 crore was admitted by the resolution professional. A total claim of Rs 3,014 crore was admitted against Uttam Value Steels.
The case had been pending in the court for more than a year, while in May 2019 CarVal inched closer to acquiring the distressed companies of Uttam Galva after it paid a performance bank guarantee of Rs 500 crore.
Earlier, State Bank of India too had said that SSG did not submit satisfactory bids and was only being disruptive at this stage by submitting an improved bid after the announcement of CarVal as the sole shortlisted bidder.
The bench on Thursday dismissed the resolution plan submitted by SSG Capital.
Operational creditors, Noble Resources and Jatia Group had objected to the plan by CarVal for accepting 99 per cent haircut it proposed.
“It cannot be seen whether Operational Creditors are receiving money equivalent to the money Financial Creditors getting because operational creditors as a class cannot equate themselves with the financial creditors and ask for more than what they are entitled,” the principal bench comprising, BSV Prakash Kumar said.
A consortium of lenders, led by the State Bank of India, had initiated insolvency proceedings against the two distressed entities of Uttam Galva Steels after the company was categorised under Reserve Bank of India’s second list of loan defaulters and had been directed to come up with immediate corrective action.
Source: Reuters.com