The Mumbai bench of the National Company Law Tribunal (NCLT) has approved the sale of Uttam Value Steel Ltd and Uttam Galva Metallics to a joint consortium of CarVal Investors and Nithia Capital Resources Advisors for ₹2,300 crore, said a person aware of the development.
“This is among the first resolutions where the corporate insolvency resolution process (CIRP) of two companies worked in tandem. The two companies are interlinked in terms of production and therefore getting two different resolution plans for them made no sense,” said the person quoted above. He added that Uttam Galva Metallics was filed in NCLT Chandigarh, the petition against the other company was filed in Mumbai.
“To ensure a smooth resolution process of these connected companies, the case was transferred from Chandigarh to Mumbai,” the person said.
The resolution plan would allow lenders to get close to 40% of their claims for both the companies. While the resolution professional (RP) admitted ₹3,634 crore of financial creditor claims in Uttam Galva Metallics, it was at ₹2,479 crore for Uttam Value Steel, as on 9 April. Union Bank of India has the highest exposure in Uttam Galva Metallics at ₹921 crore, followed by Bank of Baroda at ₹680 crore and Punjab National Bank at ₹571 crore, among others.
Union Bank of India also has the highest exposure in Uttam Value Steel, at ₹589 crore. The other lenders are Punjab National Bank at ₹466 crore, State Bank of India at ₹416 crore and Bank of Baroda at ₹277 crore, among others.
While the joint resolution plan was approved by the committee of creditors (CoC) in April last year, SSG Capital, the other bidder for these assets contested the decision. The case to decide on SSG’s claims was then heard by a two-judge bench in Mumbai NCLT, where both judges took opposing views. The matter was then heard by the principal bench of the NCLT in New Delhi which dismissed SSG’s plea.
“The winning bidders had submitted a performance bank guarantee of ₹500 crore for both companies and it would have expired on 30 April if the plan was not approved,” said the person quoted above, adding that if not for last-minute litigation, the resolution would have been faster.
Since its inception, the IBC process has been mired in last-minute litigations with promoters trying hard to retain control of their companies. Take the instance of Essar Steel. While IBC prescribes for asset resolution to happen within 330 days, Essar Steel’s resolution and sale to Arcelor Mittal took 866 days.
