25 April 2019: ACG Associated Capsules, whose bid for Sterling Biotech was rejected by lenders earlier, approached the National Company Law Tribunal on Wednesday asking them to reconsider the bid.
This comes amid lenders moving an application seeking to withdraw the bankruptcy plea on Sterling Biotech.
The tribunal had fixed April 26 as the next date of hearing on the plea seeking to take the company out of the bankruptcy proceedings but has not fixed a date for hearing the plea to reconsider the bid from ACG.
It’s not known how much ACG has agreed to pay for the crippled company, while the absconding promoters have offered to pay Rs 3,100 crore to an Andhra Bank-led consortium by June 2019 without interest and penalties on a debt of Rs 7,500 crore.
The bidder’s counsel said it is better for a company to remain operational than going for liquidation.
The lenders had rejected the resolution plan submitted by ACG and opted to send the company for liquidation earlier this month.
Sterling Biotech is the flagship of the Sandesara family’s Sterling Group and its four promoters — Nitin Sandesara, Chetankumar Sandesara, Dipti Chetan Sandesara and Hiteshkumar Patel — are absconding and are facing extradition.
Earlier in the month, the tribunal had observed that the application for withdrawing the insolvency plea against Sterling Biotech by Andhra Bank, one of its financial creditors, was filed on the last day of the statutory period and then the resolution professional filed the application for withdrawal after the statutory period.
The first withdrawal of insolvency plea was filed by the financial creditors but in violation of the extant rules, while the second was filed by the resolution professional after the completion of the statutory period, hence, the maintainability of the withdrawal application was questionable, the tribunal had observed.
It can be noted that at the last hearing on March 26, NCLT for the second time questioned the motive of the Andhra Bank-led lenders in withdrawing the bankruptcy plea against Sterling Biotech and to choose a one-time settlement with the absconding promoters.
The move came after the banks accepted an out-of-court settlement offered by promoters,the Nitin Jayantilal Sandesara and family, offering Rs 3,100 crore of repayments by June 2019 against a loan default of Rs 7,500 crore, excluding interest and penalties.
The Sandesara group owes over Rs 15,000 crore to lenders. Another group company Sterling SEZ is also under bankruptcy proceedings and owes over Rs 8,100 crore to its financial and operational lenders.
At the March 11 hearing also, the tribunal had questioned the one-time settlement by absconding promoters.
“Over 90 percent of lenders approved the settlement offer of around Rs 3,100 crore and under Section 12A of the bankruptcy code,” Nishit Dhruva, managing partner of MDP & Partners, who was representing the lenders in the case, had argued on March 11.
The lenders have already got a little over 5 percent of the default amount of Rs 179.67 crore from the outstanding amount on the day of default.
Apart from defaults, the promoters are also accused of fraud and are being investigated by the Central Bureau of Investigation, the Enforcement Directorate and the Serious Frauds Investigation Office for money laundering. They have reportedly attached assets worth Rs 4,700 crore.