NCLT allows ~8 billion claims against Monnet Ispat
Resolution professional, creditors to consider claims and submit resolution plan next week
The National Company Law Tribunal’s (NCLT’s) Mumbai bench on Tuesday instructed the resolution professional (RP) appointed to oversee the Monnet Ispat and Energy (MIEL) bad debt case to consider the new claims made against the corporate debtor, and place these before the committee of creditors (CoC).
A source close to the development told Business Standard the CoC would meet on Saturday to consider these claims, worth ~8 billion, in addition to prospective acceptance of the bid offer made by JSW Steel and AION Investments.
MIEL is on the first list of 12 large nonperforming asset (NPA) accounts referred for insolvency and bankruptcy proceedings by the Reserve Bank of India last June. The claim made by lenders against the firm is ~107 billion. MIEL has a 0.8 million-tonne (mt) sponge iron plant, a 2 mt pellet plant, and a 0.96 mt sinter plant.
It also has an integrated steel plant at Raigarh, Chhattisgarh, which produces hot-rolled plates, rebars and structure profiles, and has a capacity of 1.5 mt per annum (mtpa), and a 230-Mw captive power plant. The company also has 7.5 mt of coal beneficiation facilities in Chhattisgarh and Odisha.
The bench of Judges B S V Kumar and Duraiswamy said, “On hearing the applications, at the request of all parties to pronounce an order before giving reasons to the order, this Bench hereby allows all applications.” The court has allowed the CoC, overseeing MIEL, to conduct its next meeting, wherein the decisions made will be subject to the tribunal’s order.
Financial creditors said the debt of MIEL, prior to Wednesday’s order, included: State Bank of India ~22.52 billion, Axis Bank ~1.32 billion, ICICI Bank ~9.02 billion, and Punjab National Bank ~4.09 billion.
Three new claims were made before the bench, of ~1.47 billion by Standard Chartered Bank, an additional ~4.86 billion owed to ICICI Bank and ~ 1.76 billion owed to Industrial Finance Corporation of India (IFCI). IFCI gave a loan to Monnet Power Company, for which MIEL was the corporate guarantor. Therefore, when Monnet Power defaulted on the loan, it made MIEL liable to repay. The treatment of this loan by the CoC and RP became a bone of contention during the hearing on Tuesday, while IndusInd Bank withdrew application against the company.
The RP must submit these claims to the CoC, which will evaluate the validity of the claim, based on which it will decide to accept or reject a part or the entirety of the claim(s) made.
The CoC has already agreed to take a haircut of around 72 per cent.
There is only one bidder for MIEL. Business Standard reported in endFebruary a revised offer made by the consortium of AION Investments Private II and JSW Steel would, in all likelihood, be accepted.