NCLAT: Binani, Essar, Bhushan & more

Most of the big cases which were pushed into resolution process under the Insolvency and Bankruptcy Code (IBC) last year continue to remain unresolved despite crossing the statutory 270-day time period; which is mostly a result of the numerous disputes arising during the process..Broadly speaking, most cases are stuck at different stages of selection of resolution applicants. While in some, disputes have been triggered prior to selection of winning bidder, in some, it is even after the bidder has been approved by the NCLT..The overwhelming speed at which these proceedings are taking place before the NCLAT (with very little progress) can often be confusing. Here is a brief summary of the current state of affairs of the cases pending before the NCLAT:.1) Bhushan Steel.The first one of the RBI 12 to have been resolved: Tata Steel has taken over the management of Bhushan through its subsidiary Bamnipal Steel Limited. The NCLT order approving Tata Steel as the successful resolution applicant has been appealed by Promoter Neeraj Singhal..The NCLAT has refused his prayer to maintain status quo to the date of NCLT order approving the resolution plan. Further, NCLAT also rejected its request to get a copy of the resolution plan. However, the case has been admitted for hearing on the single question of determining the eligibility of Tata Steel under Section 29A..Next listed on May 30..2) Bhushan Power and Steel.This is an appeal by resolution applicant, Tata Steel, against the order of the NCLT allowing the bid of another resolution applicant, Liberty House, to be placed for consideration..Liberty House had submitted its bid after the Committee of Creditors (CoC) prescribed deadline as a result of which the bid was rejected. Liberty House opposed this move before the NCLT and was subsequently able to obtain relief where the NCLT passed an order directing the CoC to consider Liberty’s bid..During the course of hearings before NCLAT, the CoC also suggested invitation of new bids. This was however declined by NCLAT. At the same time, NCLAT directed the CoC to consider bids submitted by both resolution applicants, and keep its decision in a sealed cover. The decision of the CoC will be subject to the final order..Next listed on July 12..3) Essar Steel.Appeals have been filed against the NCLT order which directed lenders to allow 1 month time to both Numetal and ArcelorMittal to clear their dues which made them ineligible under Section 29A..ArcelorMittal appealed arguing that its bid was eligible whereas Numetal appealed arguing Mittal cannot be given extra time to clear its dues. Numetal filed another appeal challenging the decision of the CoC invalidating its bid and asking Numetal to clear its dues..While ArcelorMittal has transferred its outstanding debt into an escrow account (which will be released only if it succeeds as a resolution applicant), Numetal has sought to reopen bidding in a second round where it will drop Rewant Ruia to compete..The NCLAT has put on hold the insolvency resolution process and directed the NCLT to not pass any further orders..Next listed on July 23..4) Electrosteel Steels.Renaissance Steel, one of the resolution applicants, has moved against the NCLT order approving Vedanta as the winning bidder. The appeal has been admitted by the NCLAT challenging the validity of Vedanta under section 29A..The NCLAT has directed status quo to be maintained which means that unlike Bhushan Steel, Electroseel Steels has not been handed over to its new management..Next listed on May 28..5) Jaypee Infratech.An appeal was filed against a recent NCLT order which directed Jayprakash Associates, the parent company of Jaypee Infratech, to release 758 acres of land mortgaged by Jaypee Infratech to help Jaypee Associates secure a debt..The Resolution Professional of Jaypee Infratech had moved against directors of Jaypee Infratech and Jayprakash Associates seeking to reverse this transaction undertaken before Jaypee Infratech went into insolvency. The transaction pertains to mortgaging of 858 acres of land held by Jaypee Infratech to secure a debt obtained by Jayprakash Associates while Jaypee Infratech was declared NPA itself. The NCLT ruled to release 758 acres of the total 858 acres, as being fraudulent, preferential and undervalued..The NCLAT has admitted the appeal and stayed the NCLT order while observing that NCLT did not have jurisdiction to pass such an order..Next listed on 13 July..6) Binani Cements.The only one outside the RBI list which has caught as much attention..Rajputana Properties, the subsidiary of Dalmia Bharat and winning resolution applicant for Binani Cements, had appealed against the NCLT order which allowed the CoC of Binani Cements to consider the revised bid submitted by Ultratech..However, the NCLT order has not been stayed and NCLAT has said that the outcome of the process will be subject to its final decision. The CoC is, until further orders, free to consider Ultratech’s revised bid while allowing Rajputana to revise its bid too..Next listed on July 10.