4 June 2019: The National Company Law Appellate Tribunal (NCLAT) has stayed the liquidation order passed by the dedicated bankruptcy court against Gujarat-based Sterling Biotech. The tribunal has granted a stay against the liquidation of the firm in two separate petitions filed by its employees and Andhra Bank, a lead consortium lender of the company.
“Until further order, the operation of the impugned order dated May 8, 2019, so far as liquidation is concerned shall remain stayed. However, the liquidator will ensure that the company remains a going concern,” said NCLAT bench presided over by Justice SJ Mukhopadhaya, Justice AIS Cheema and Kanthi Narahari. “The bank account(s) of the corporate debtor (Sterling Biotech) be allowed to be operated for the day-to-day functioning of the company such as for payment of current bills of the suppliers, salaries and wages of the employees’/workmen, electricity bills etc.” Last Friday, while staying the tribunal order, the appellate tribunal had given two weeks’ time to the lenders and RP of the company to file their reply and posted the matter for July 16 for further hearing. The lenders, led by Andhra Bank had sought the tribunal’s approval after accepting the one-time settlement from the Sandesara brothers, the fugitive promoters of Sterling Biotech.
On May 8, NCLT had rejected an application from the Sterling Biotech lenders to withdraw their insolvency resolution petition. Over 90 per cent of the lenders had approved the settlement offer of Rs 3,945 crore and withdrawal of the insolvency case under Section 12 (A) of the Insolvency and Bankruptcy Code. The lenders received 5 per cent of the default amount on the day of default.
Total dues to the lenders stand above Rs 8,100 crore. Nishit Dhruva, managing partner of law firm MDP & Partners, an advisor to Andhra Bank, confirmed the development but refused to comment as the matter is subjudice. Sundaresh Bhat, partner and leader of resolution process advisory at consultancy BDO, who is the RP for the company confirmed the development but refused to divulge any details.
Sterling promoters Chetan and Nitin Sandesara are absconding and believed to be in Africa. The Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and the income tax department are looking into the dealings of the promoters.