Gujarat NRE ex-promoter can’t negotiate with creditors

Allowing the appeal of Jindal Steel and Power, the National Company Law Appellate Tribunal (NCLAT) has held Arun Kumar Jagatramka, the former promotor of Gujarat NRE Coke, not eligible to negotiate with the creditors of the debt-ridden company.

A two-member bench of NCLAT headed by Chairperson Justice S J Mukhopadjaya said that as Jagatramka, who was ineligible to be a Resolution Applicant of the company under the Insolvency & Bankruptcy Code (IBC), cannot be allowed at this stage to negotiate with the creditors of Gujarat NRE Coke.

Jindal Steel and Power, which is an unsecured creditor of Gujarat NRE Coke, had challenged an NCLT order that allowed the promoters to settle debts with its creditors.

NCLT had given a go ahead to Jagatramka for “Financial Scheme of Compromise and Arrangement” with him and the company through its Liquidator, after holding the debts of shareholders, creditors etc.

The appellate tribunal set aside the order passed on May 15, 2018, by the Kolkata bench of National Company Law Tribunal (NCLT).

“... it is clear that the Promoter, if ineligible under Section 29A cannot make an application for Compromise and Arrangement for taking back the immovable and movable property or actionable claims of the Corporate Debtor',” said NCLAT.

Section 29A of IBC defines the persons, who are not eligible to submit bids for a company going through corporate insolvency resolution process.