NCLT approves OCL Iron & Steel Ltd’s Rs 113-cr resolution plan for Helios Photo Voltaic

The NCLT approved the Rs 113-crore resolution plan submitted by OCL Iron & Steel Ltd for Helios Photo Voltaic Ltd. OCL Iron & Steel Ltd. offered to pay ₹101.12 crores to settle the claims of creditors within 30 days, along with an additional ₹12.20 crores for the Noida land dispute and capital expenditure (CAPEX). The NCLT granted one year for the implementation of the resolution plan, including obtaining necessary statutory approvals.

The CoC conducted e-voting from 31 August 2024 to 7 September 2024. The resolution plan submitted by OCL Iron & Steel Ltd. was approved by 73.38% of the CoC. Helios Photo Voltaic Ltd owed Rs 3,360 crore to financial creditors. The fair value of the Corporate Debtor was determined to be ₹122.22 crores, while the liquidation value was ₹101.38 crores.

The insolvency process was initiated by the National Asset Reconstruction Company Ltd. (NARCL), a financial creditor, under Section 7 of the IBC. The NCLT admitted the petition on 11 January 2024, and ASC Insolvency Services LLP was appointed as the Interim Resolution Professional (IRP), later confirmed as the Resolution Professional (RP). Helios Photo Voltaic Ltd. (Corporate Debtor) is a company engaged in the manufacturing of solar energy equipment, including photovoltaic cells, thin film modules, panels, and other electrical equipment. The company faced financial distress, leading to the initiation of insolvency proceedings.

Claims and Creditors:
The RP collated claims from various creditors, including:

1. Financial Creditors: NARCL (73.38% voting share), Alchemist Asset Reconstruction Company (18.69%), and International Finance Corporation (7.93%).
2. Operational Creditors: Employees and government dues (EPFO).
3. Other Creditors: No significant claims were filed by other operational or unsecured creditors.

Key Issues and Objections

1. Objections by Gateway Investment Management Services (GIMS):
   GIMS, the unsuccessful resolution applicant, filed an application seeking the rejection of OCL Iron & Steel Ltd.’s resolution plan. GIMS argued that:
   • It had submitted a higher bid of ₹109.875 crores, with 25% upfront payment within 45 days and the balance within 12 months.
   • During the voting process, GIMS clarified that it would pay the second installment within 90 days instead of 12 months, but the RP did not place this clarification before the CoC.
   • GIMS later revised its offer to ₹120 crores, payable within 30 days, and requested the CoC to reconsider its plan.
2. RP’s Defense:
   The RP argued that the Challenge Process was final and binding, and no modifications to the financial proposals were permitted after the process concluded. The RP also emphasized that the CoC had exercised its commercial wisdom in approving OCL Iron & Steel Ltd.’s plan, which offered faster payment to creditors.
3. NCLT’s Findings:
   The NCLT dismissed GIMS’s objections, holding that:
   • The CoC’s decision was based on the Evaluation Matrix and the commercial wisdom of the creditors.
   • The Challenge Process was binding on all PRAs, and GIMS could not revise its offer after the process concluded.
   • The resolution plan submitted by OCL Iron & Steel Ltd. was feasible, viable, and compliant with the IBC.

NCLT’s Final Order

1. Approval of Resolution Plan:
   The NCLT approved the resolution plan submitted by OCL Iron & Steel Ltd., which included:
   • Payment of ₹101.12 crores to settle the claims of creditors.
   • Additional ₹12.20 crores for the Noida land dispute and CAPEX.
   • The plan was binding on the Corporate Debtor and all stakeholders.
2. Dismissal of GIMS’s Application:
   The NCLT dismissed GIMS’s application (IA-5176/2024), holding that the CoC’s decision was final and could not be challenged on the grounds of value maximization alone.

Also See: NCLT approves Mangalam Multiplex resolution plan for Varutha Developers