INSUBCONTINENT EXCLUSIVE:
Mumbai: A new amendment to corporate insolvency regulation prescribing stringent punishment for successful resolution applicants who fail to
make promised payments is likely to protect the new bankruptcy law from frivolous bidders, lawyers said
The amendment comes after recent cases of backtracking by winning bidders in taking over debtladen companies.
The latest of such example is
the case of Chennai-based Orchid Pharmaceuticals, which owed lenders Rs 3,000 crore
Last week, a two-judge bench of the National Company Law Tribunal (NCLT) ordered the restart of the resolution process after US-based Ingen
Capital Group failed to deposit money to take over the debt-laden company
Earlier, UK-based investor Liberty House had backed out after being declared the highest bidder in the case of Amtek Auto and Adhunik
successful applicant to provide performance security, which can be forfeited in the eventuality of a default
The amendment also requires every resolution applicant to declare if the applicant or its related party failed to implement a plan in the
representing the committee of creditors (CoC) led by SBI in the Orchid Pharma case
In February 28 order, a two-judge bench of justices S Vijayaraghavan and BSV Prakash Kumar had granted resolution professional (RP) SV
Ramkumar another 105 days to invite fresh expressions of interest and find new bidders for the company
Ingen had offered to pay Rs 1,060 crore under a resolution plan approved on September 17 within 30 days of the order
As part of this payment, Ingen had to first deposit one-third of the amount or Rs 334 crore within five days
The company failed to make the payment but instead filed a fresh petition to replace the RP.
In its order, the court said the RP has
received email enquiries from Divi Laboratories, Gland Celsus Biochemicals and Fidelity Trading Corp and oral enquires from ART Capital
Rs 1,060 crore was at a 65% haircut to the total debt of over Rs 3,000 crore the company owes a consortium of more than 24 lenders
It remains to be seen whether any new bidder offers a higher amount
The company has around 1,500 employees on its roll
It was among the list of 28 companies that the RBI had sent to banks in August 2017 seeking a speedy resolution
These total bad loans aggregated to about Rs 2 lakh crore.
