Binani takeover reaches NCLT after Dalmia Bharat pips Ultratech

Binani takeover reaches NCLT after Dalmia Bharat pips Ultratech

Varun Marwah

A Kolkata bench of the National Company Law Tribunal (NCLT) yesterday asked Binani Cement’s Resolution Professional to submit his response to an application filed by Binani’s directors.

The (displaced) directors of Binani, have filed an application against its resolution professional, Vijaykumar Iyer of Deloitte, alleging violative handling of the resolution process. The Bench has listed this matter for hearing on March 19, 2018. At the same time, Ultratech also sought to intervene alleging lack of transparency over the evaluation of bids.

While there is no official declaration of the winning bidder, news reports have suggested that it is the Dalmia Bharat-Bain Piramal Resurgence Fund consortium that has emerged victorious. UltraTech in its application, however, has mentioned that Rajputana Properties, a wholly owned subsidiary of Dalmia, was the winning bidder.

More specifically, UltraTech has sought clarifications on why its bid was turned down by the resolution professional.

Ultratech in its recent application has said that the Resolution Professional had forwarded comments / clarifications sought by Luthra & Luthra (Legal counsel to the Resolution Professional, Deloitte), Argus Partners (Legal counsel to the CoC) and Alvarez & Marsal (Advisor to the CoC) and sought responses of the Applicant.

Ultratech claimed, in view of highly competitive process they apprehend there would be a situation where the bid value of more than one bidder may be in close proximity of each other. In such a situation, it will be important to call top 3 bids, if their bid value are in close proximity of narrow range. This would also enable committee of creditors, to not only look at the total scoring, but also at the quality of the bids and ensure that the bids have given a fair treatment to all stakeholders, and most importantly, would enable the maximisation of value for the assets of the insolvent, as contemplated by the Code.

On February 9, 2018, it was communicated to all the bidders that the Committee of Creditors (CoC) will negotiate only with the bidder who receives highest score based on the evaluation criteria.

The evaluation, which was done by Alvarez & Marsal, had penalized Ultratech apprehending that it may not secure the necessary clearance from Competition Commission of India (CCI). UltraTech was fined by the CCI in its cartelization order against various cement companies. The CoC thus thought of this as a hurdle in obtaining CCI’s approval for the takeover. In Ultratech’s defence, it said:

no adverse orders against the Applicant in past 5 years and that CCI had passed orders against several members of the cement industry which orders are under challenge before National Company Law Appellate Tribunal (NCLAT) and operation of the orders passed by CCI has been stayed”.

As  reassurance, UltraTech also informed the CoC that it has been involved in other acquisitions ever since, for which CCI  granted approval well in time.

However, after assessing near identical bids by Rajputana (Dalmia Bharat) and Ultratech, it appears that Rajputana emerged as the winning bidder.

Ultratech, in this application to the NCLT, has expressed the view that this decision was taken at a meeting to which it was not invited, while is legally entitled to be a part  such a meeting under Section 30(5) of the IBC. Further, Ultratech has also held a view, that it’s bid was turned down due to the previous CCI fines that were imposed on it, and possibly due to the fact that the winning bidder’s plan was more favourable towards the financial creditors, who essentially chose the resolution plan.

Upon selection of Rajputana, Ultratech wrote to the resolution profession asking for details on the weight given to its bid compared to the winning bid. However, the response received from the  resolution professional was unsatisfactory.

Accordingly, Ultratech has sought directions from the NCLT requiring the CoC and the resolution professional to provide Ultratech with the manner of application of the evaluation criteria.

Ultratech has also sought NCLT to direct Deloitte to comply with Section 30 (5) of the IBC, to ensure that it is invited to attend every proposed meeting of the CoC at which the resolution plan of any bidder is considered.

Senior Advocates Abhrajit Mitra and Joy Saha briefed by Luthra & Luthra appeared for the Resolution Professional. Senior Advocates SN Mookherjee and Ratnanko Banerjee along with Shounak Mitra appeared for directors of Binani.

Ex Advocate General, Jayanta Mitra briefed by Shardul Amarchand Mangaldas appeared for Dalmia/Rajputana.

Somasekhar Sundaresan appeared for UltraTech, who was briefed by Vaish Associates.

Former Maharashtra Advocate General Ravi Kadam is also believed to be advising the CoC.

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