The Mumbai bench of the National Company Law Tribunal (NCLT) has directed the liquidator of Sterling Biotech to stay the auctioning process of the company until further orders.
The NCLT was hearing a petition filed by one of Sterling Biotech’s successful qualified bidders, India Gelatine and Chemicals Ltd.
Gujarat-based Sterling Biotech is the world’s sixth-largest manufacturer of pharmaceutical gelatin and owes over Rs 8,100 crore to financial and operational creditors.
As per the NCLT order, the lease of a land parcel of about 107 acres, which is part of the company’s estate, was cancelled by the collector on December 13, 2021.
“In view of the fact that the assets of the corporate debtor (Sterling Biotech) are not perishable, no harm or prejudice will be caused to the respondent (liquidator) as far as the auction is concerned even if the same is postponed for a short time,” the NCLT bench led by Justice Pradeep Deshmukh said in its order of January 31.
NCLT will hear the matter next on February 16.
Originally, this lease was given by another group company Sterling SEZ to Sterling Biotech, which was later cancelled by the former company. Sterling Biotech’s plea challenging that termination by Sterling SEZ is also pending in the NCLT. Later, the collector in Gujarat cancelled the lease on the same land parcel.
To be sure, Sterling SEZ is a separate group entity and the tribunal has also ordered the liquidation of the company on October 18, 2021.
Now, India Gelatine and Chemicals has sought the tribunal’s intervention to get more clarity on the issue.
The lawyers for the liquidator have informed the tribunal that the company is being sold as a going concern and that all the bidders have been informed about the latest developments with regard to the cancellation of the lease and other matters.
Currently, India Gelatine and Chemicals in a consortium with Shamrock Pharmachemi Pvt Ltd is among five qualified bidders to participate in an auction of Sterling Biotech. Other bidders include US-based startup Perfect Day Inc, Belgian firm Tessenderlo Chemie International NV, ACG Associated Capsules and Progressive Star Finance Pvt Ltd.
The liquidator has set a reserve price of Rs 548.46 crore for the company.
Mamta Binani, the liquidator for Sterling Biotech, and her associate Lovkesh Batra refused to comment since the matter is sub judice.
“It is critical that the auction occurs within the stipulated time frame to maintain bidders’ interest, and also that the lease in question is not terminated, since this would diminish the value of the corporate debtor’s assets, which are a critical component of the assets,” said Sonam Chandwani, managing partner, KS Legal.
The group and its subsidiaries, Sterling SEZ and Sterling International, collectively owe Rs 15,000 crore to financial and operational creditors.
