~40 bn in debt, Sterling Biotech lands in NCLT

Pharmaceutical company Sterling Biotech has been admitted by the National Company Law Tribunal (NCLT) for insolvency proceedings under the Corporate Insolvency Resolution Process (CIRP). The Gujarat-based company owes banks more than ~40 billion. Its parent, the Sterling Group, along with other businesses, owes lenders more than ~50 billion.

Advocate Shyam Kapadia approached the NCLT on behalf of Andhra Bank, stating that while the firm’s debts piled up, the promoters had fled the country. As of December 2016, the company defaulted on loans of ~54 billion.

In October 2017, the Enforcement Directorate (ED) began a probe into alleged money laundering by the company and its promoters, Nitin and Chetan Sandesara.

It is alleged that several companies belonging to the Sandesara brothers had obtained credit worth ~53.83 billion from banks on the basis of false and fabricated documents. These loans turned into non-performing assets (NPAs), and had been sanctioned by a consortium of banks led by Andhra Bank and comprising UCO Bank, State Bank of India, Allahabad Bank and the Bank of India. Now that the company has been admitted for insolvency proceedings, lenders other than Andhra Bank will file their claims with an appointed interim resolution professional.

Banks have so far declared the following accounts as fraudulent: Sterling Group, including Sterling Biotech, Sterling Port, PMT Machines, Sterling SEZ and Infrastructure, and Sterling Oil Resources.

Further, in January 2018, the ED arrested former Andhra Bank Director Anup Prakash Garg in connection with an FIR registered by the Central Bureau of Investigation (CBI).

The agency said “certain entries” in a diary the Income Tax Department seized in 2011 spoke of the Sandesara brothers paying “Mr Garg, director, Andhra Bank” ~15.2 million in 2008 and 2009.

On June 1, the ED attached assets worth around ~47 billion. The assets include immovable properties of about 4,000 acres, plant machinery, around 200 bank accounts of various companies and accounts of promoters, shares worth ~66.7 million, and high-end luxury cars. Apart the Sandasera brothers and others, the CBI has booked Garg.