The dedicated bankruptcy court has rejected an application from the Sterling Biotech lenders to withdraw their insolvency resolution petition.
The lenders, led by Andhra BankNSE 1.67 %, had sought the tribunal’s approval after accepting the one-time settlement (OTS) from the Sandesara brothers, the fugitive promoters of Sterling Biotech.
The Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday referred the Gujarat-based company for liquidation, said two people familiar with the development.
“The tribunal has decided to refer the company for insolvency in a verbal order,” said one of the people quoted above. “One of the reasons that the tribunal has given is that the resolution professional (RP) of the company should have approached the tribunal before re-voting on the withdrawal petition once the proposal failed at statuary 90% favourable voting.”
Over 90% of the lenders had approved the settlement offer of around Rs 3,945 crore and withdrawal of the insolvency case under Section 12 (A) of the Insolvency and Bankruptcy Code (IBC). The lenders received 5% of the default amount on the day of default. Total dues to the lenders stand above Rs 8,100 crore.
The NCLT had on May 2 reserved its order in the withdrawal of the insolvency petition. The bench, presided over by VP Singh and Ravikumar Duraisamy, had observed that the resolution professional (RP) of the company should have informed the tribunal after the application was rejected in the first voting of the committee of creditors.
Sundaresh Bhat, partner and leader of resolution process advisory at consultancy BDO, who is the RP for the company, confirmed the tribunal order but refused to divulge details. Nishit Dhruva, managing partner of law firm MDP & Partners, an advisor to the bankers, also confirmed the development but refused to comment since the detailed order is yet to come.
Sterling promoters Chetan and Nitin Sandesara are absconding and believed to be in Africa. The Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and the income tax department are looking into the dealings of the promoters.
Three companies of the Gujarat-based Sterling Group — Sterling Biotech, Sterling SEZ and trading arm Sterling International — are facing insolvency cases. In a separate development, the tribunal has also stayed the withdrawal petition of lenders to Sterling SEZ. These bankers too accepted a settlement offer from the promoters. Sterling SEZ owes around Rs 4,500 crore to its lenders.
The group collectively owes its financial and operational creditors Rs 15,000 crore.
Source: Economic Times