DALMIA BHARAT SAYS ULTRATECH CAN’T BID FOR BINANI CEMENT
On the eve of the crucial meeting of Binani Cement's Committee of Creditors (CoC) on Thursday, Dalmia Bharat Cement has written to the lenders and the company's resolution professional, alleging that UltraTech Cement is disqualified to bid for Binani Cement under Section 29 (A) of the IBC. This section deals with ineligibility parameters for resolution applicants.
On the eve of the crucial meeting of insolvent Binani Cement’s Committee of Creditors (CoC) on Thursday, Dalmia Bharat Cement has written to the lenders and the Resolution Professional that UltraTech Cement should be kept out.
The charge is that UltraTech is disqualified under Section 29 (A) of the Insolvency and Bankruptcy Code.
The section deals with ineligibility parameters for resolution applicants. It says a person or promoter who is managing a company classified as a nonperforming asset for a period of one year till commencement of insolvency proceedings stands disqualified. Any other person acting jointly or in concert with the ineligible resolution applicant also stands disqualified.
A source in Dalmia Bharat says UltraTech had tried to financially back Braj Binani, promoter of Binani Cement, for an out-of-court settlement with the lenders. According to the source, Brij Binani is disqualified from any bidding and since UltraTech had cooperated to finance Binani, it also stands disqualified.
In March, UltraTech had given a public notice on the stock exchanges that it had concluded an agreement with Binani Cement and also financed a ~7.5-billion bank guarantee after the lenders wanted “some confidence of guarantee from Binani” for an out-ofcourt settlement.
Binani Industries, which owns Binani Cement, had also sought approval from shareholders to finalise a deal with UltraTech. The agreement says UltraTech, part of the Aditya Birla Group, had agreed to pay ~72.66 billion to Binani Cement for taking 98 per cent stake in the company, on the condition that insolvency proceedings are terminated.
A comfort letter to this effect was issued by the Kumar Mangalam Birla-controlled firm to Binani Cement. However, Binani Cement failed to conclude an out-of-court settlement with its lenders.