Tribunals dismiss Macquarie Bank’s insolvency petition against Uttam Galva Metallics

Industry:    July, 2017

The National Company Law Appellate Tribunal in Delhi has upheld a Chandigarh NCLT order dismissing Macquarie Bank’s insolvency petition against Uttam Galva Metallics on the grounds that the Australian lender was not registered locally also that the Insolvency and Bankruptcy notice was not issued by an “operational creditor’, but by a Singapore lawyer.

In an order dated July 17, NCLAT said that Macquarie Bank had no office in India, nor any account with any of the local banks or financial Institutions.

“We find from the record that the so called application is not in accordance with law and is defective,” Justice SJ Mukhopadhaya said in his order.

Macquarie Bank, Australia is not a scheduled bank in India nor is a financial institution as defined under Section 45-I of Reserve Bank of India Act 1934, he observed.

Lenders and companies seek to resolve their debt under the new Insolvency and Bankruptcy Code that replaced the previous overlapping laws and provided a time-bound framework to complete resolution within 180 days.

Uttam Galva Metallics, a privately held unit of Miglani family promoted Uttam Galva Group, has about Rs 43 crore dues to banks, including interest. ArcelorMittal owns 29% is Mumbai’s based Uttam Galva SteelsBSE 1.01 %, maker of cold rolled and galvanised steel.

Banks including State Bank of India, Punjab National Bank, IDBI Bank and ICICI Bank have around Rs 6,000 crore of exposure to Uttam Galva Steels and its group entities including Uttam Value Steels, and Uttam Galva Metallics.

The Mumbai-based group has been in tress with ballooning debt and a sharp drop in profitability. It has become a non-performing assets issue for several lenders of the 18-member consortium.

Uttam Galva reported net loss of Rs 193 crore for the first quarter ended June, compared with Rs 233 crore in the year ago period. Its stock price closed at Rs 29.60 Friday on BSE.