26 March 2019: The attempt by the committee of creditors to withdraw insolvency proceedings against Sterling Biotech did not materialise and the National Company Law Tribunal reserved its order in the matter and listed the matter for hearing on April 26. The bench, presided over by V P Singh and Ravikumar Duraisamy, questioned the motive of the bankers who have accepted the one-time settlement offer by the committee because granting the bankers’ plea would mean the absconding promoter would get back the company with a clean balance sheet.
BS: NCLT reserves order in Sterling-Andhra Bank case; next hearing on April 26
But, Section 29A of Insolvency and Bankruptcy code says the promoters of the debt-ridden company, which is facing insolvency proceeding, cannot bid for the company.
But if the withdrawal application is accepted by the tribunal under Section 12A, which states that a withdrawal application may be approved by the NCLT after 90 per cent of the CoC by vote share approves of it, then it will essentially mean that the promoters will shrug off their liabilities, get their company back and pay a fraction of the amount they owe to banks and banks will have to take a large haircut on their exposure.
In the last hearing, the tribunal had sought the views of Ministry of Corporate Affairs (MCA), Income Tax department, Enforcement Directorate, Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI) and the CBI on the matter.
Of all the authorities concerned, who were asked to give their views, ED and Sebi replied.