NCLAT nixes attempts of Shyam Sel and Power to revise resolution plan for Mittal Corp
In a case that appears to be like that of the Reliance Capital corporate insolvency resolution plan (CIRP), the National Company Law Appellate Tribunal (NCLAT) has set aside an order by the NCLT to allow one of the resolution applicants – Shyam Sel and Power Ltd – to revise its resolution plan for Mittal Corp Ltd during the Challenge Process.
The NCLAT in its order on 18th January said that after adoption of Swiss Challenge Method to find out the best plan one Resolution Applicant cannot be allowed to submit a revised plan.
“It is well settled that the timeline in the IBC has its salutary value and it was the wisdom of the CoC which decided to vote on the Resolution Plan after completion of Challenge Process and not to proceed to take any further negotiation or further modification of the plan, that decision ought not to have been interfered with,” the appellate tribunal said in its order.
The tribunal further noted that the NCLT without there being any valid reason ought not to have been interfered with the voting on the Resolution Plans which had already commenced on 07 August 2022. “As result of the order of the NCLT, the process of voting which had commenced on 07 August 022 was abandoned by the Resolution Professional,” it said.
Jindal Stainless, which is one of the resolution applicants on whose plan the CoC was likely to vote, had moved the appellate tribunal against the NCLT order allowing Shyam Sel and Power Ltd revise its resolution plan.
Facts of the case
The Mumbai bench of the NCLT Adjudicating in an order on 10 November 2021 initiated Corporate Insolvency Resolution Process (CIRP) against ‘Mittal Corp Limited’.
The Resolution Professional received six Resolution Plans including the Resolution Plan submitted by the Appellant- ‘Jindal Stainless Limited’ as well as by Respondent ‘Shyam Sel and Power Limited’.
The Committee of Creditors (CoC) in 12th meeting held on 04 July 2022 decided to undertake a Challenge Process in order to give an opportunity to the Resolution Applicants to improve their plans.
The Resolution Professional issued a process note on the Challenge Process mechanism.
All the Resolution Applicants were required to submit their unconditional acceptance of the rules of the said Challenge Process in the interest of maximising the value of assets of the Corporate Debtor. All the Resolution Applicants were communicated the rules of the Challenge Process and after receipt of the unconditional acceptance, Challenge Process was conducted in the 13th CoC meeting held on 15July 2022. All the Resolution Applicants were invited in the 13th CoC meeting.
The Challenge Process continued for seven rounds until there was only one competing Resolution Applicant remaining in the Challenge Process. All the Resolution Applicants were notified that the signed and compliance Resolution Plan must be submitted by 18 July 2022.
Apart from Jindal Stainless and Shyam Sel and Power, two other Resolution Applicants submitted their amended Resolution Plans by 18 July 2022.
On 19 July 2022, Shyam Sel and Power sent an e-mail to the Resolution Professional stating that it was willing to submit the entire NPV offered as upfront payment within 30 days.
15th CoC meeting was held on 25 July 2022 where communication received from Shyam Sel and Power was discussed. On 25 and 29 July 2022, Shyam Sel and Power had sent more e-mails further improving its offer.
However, in the 17th CoC meeting on 30 July 2022, CoC resolved to put four plans to vote. Voting was to commence from 05 August 2022 till 26 August 2022.
In the meanwhile, Shyam Sel and Power filed an interlocutory application IA before the NCLT seeking a direction that Resolution Professional to consider the offer dated 29 July 2022 and place the same before the CoC. Further prayer was made that the Resolution Professional be restrained from continuing with CIRP. The NCLT on 11 August 2022 directed the CoC to consider the improved plan of Shyam Sel and Power.
The Insolvency application against Mittal Corp was filed by erstwhile Oriental Bank of Commerce (now Punjab National Bank) for default in paying Rs 245 crore. Mittal Corp owes its creditors Rs 1,800 crore.
Similarity with Reliance Capital Case
This case has similarities with the Reliance Capital case, where two of the resolution applicants continue to revise their resolution plans even as the challenge process is on.
First, the Hinduja group revised its bid price for Reliance Capital to Rs 9,500 crore on 23rd December 2022, two days after the e-auction. Hindujas had earlier quoted Rs Rs 8,110 crore in the e-auction. As per Hindujas revised bid, they agreed to pay Rs 8,800 crore upfront.
Later on 6 January 2023, the Torrent group revised its bid offering Rs 8,640 crores as upfront cash. Earlier, the company was offering Rs 3,750 crores as cash upfront and balance in deferred payment.
Now, Torrent Group has moved NCLT opposing the CoC’s decision to hold second round of e-auction. The hearing in the case is on.
Also Read: Now Torrent group revises bid for Reliance Capital; offers Rs 8640 cr in upfront cash
