IVRCL liquidation process marred by delays, controversies
The IP registration of Sutanu Sinha, the liquidator of IVRCL Ltd, was recently suspended by the Insolvency and Bankruptcy Board of India (IBBI) after it found inconsistencies in conducting the auctions during the liquidation period.
The Disciplinary Committee of the IBBI also found that the valuation of IVRCL Ltd was conducted beyond the prescribed timelines and the reserve price for auction was reduced beyond the permissible limits under the Liquidation Regulations. It also accused Sinha of showing lack of objectivity, transparency, justification, and reasonableness in fixing the fee of IPE as support services.
The latest IBBI order against the IVRCL liquidator raises the question of why it is taking so long for the closure of the liquidation process that began in July 2019, and what is the current status of the liquidation process.
Current Status
IVRCL Ltd has been successfully bid by a consortium led by P Prasad Reddy, the promoter of Raghava Water and Raghava Construction. The NCLT paved the way for the takeover of IVRCL Ltd as a going concern by P Prasad Reddy after it rejected petitions raising objections to the same under Section 29A.
The consortium won the bid at a price of Rs 1,200 crore. The NCLT on June 15, 2022, ordered the consortium to pay the rest of the amount of Rs 1,150 crore (Rs 50 crore was paid as earnest money deposit) within 12 months in six tranches. The first payment of Rs 200 crore was due on August 14, 2022, and thereafter Rs 200 each for the next four tranches every 2 months. The last instalment of Rs 150 crore was due on June 14, 2023.
However, the successful bidder has paid only Rs 100 so far out of the Rs 1,150 crore. It is now seeking more time to make the payment.
The consortium has now moved the NCLT seeking exclusion of the period from December 28, 2021, to June 14, 2023, from the liquidation period.
First and Second Auctions
The first e-auction process resulted in the identification and declaration of GABS Megacorp Limited as the successful bidder on February 27, 2020. Accordingly, GABS had deposited the earnest money amount of Rs 5 crore. However, the first e-auction had to be cancelled because GABS, as the successful bidder, had failed to pay the balance bid price/sale consideration as per the timeline specified in the Liquidation Regulations. Consequently, pursuant to the order dated April 16, 2021, passed by the AA, the entire bid process was cancelled.
The reserve price for the first e-auction was Rs 1,654.5 crore.
Thereafter, the liquidator conducted the 9th Stakeholder Consultation Committee meeting on June 7, 2021, wherein the SCC advised that the liquidator should conduct a second round of auction for the sale of IVRCL as a going concern. On the advice of the SCC, Sinha published the e-auction process documents on June 16, 2021, for the second auction process. After the publication of e-auction process documents, three prospective bidders had put forward their expression of interest in acquiring IVRCL as a going concern in the second e-auction process. However, in view of the non-depositing of EMD by any of the prospective bidders, the entire bid process during the second e-auction was cancelled.
Thereafter, the liquidator put out a third e-auction in November 2021 with the reserve price of Rs 1,200 crore.
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