New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Friday adjourned hearing in a slew of appeals challenging the approved resolution plan of Birla Tyres.
The NCLAT said the appeals will be heard separately during the first week of December and January.
The latest appeals include that of HDFC Bank challenging Himadri Specialty Chemical Ltd and Dalmia Bharat group’s plan to jointly acquire Birla Tyres.
Another petition involves Kesoram Industries Ltd, the parent company of Birla Tyres, contesting the dismissal of its claims as a financial creditor in the Birla Tires insolvency proceedings. Additionally, Manav Investment and Trading Company Ltd, a shareholder, is raising a worker’s claim in his case.
Request from HDFC Bank:
In its plea, HDFC Bank claimed that the distribution of shares among financial creditors in the resolution plan was based on the value of the security of interest, which it argued went against the law. The bank claimed that the Committee of Creditors (COC) justified this distribution by citing their business wisdom.
The COC said HDFC Bank’s petition had no merit as it challenged the committee’s majority decision without challenging the resolution plan itself. The COC maintained that its decisions cannot be overturned, even by NCLAT, unless the resolution plan violated the provisions of the Insolvency and Bankruptcy Code (IBC).
However, HDFC Bank explained that it challenged the resolution plan. The court issued notices to the parties involved, seeking answers and responses, and the hearing was adjourned until January.
Request from Kesoram Industries:
The parent company challenged its exclusion from the list of financial creditors by the new Resolution Professional (RP) in the Birla Tires case. Initially recognized as a financial creditor with ₹516 crore claims and 30% vote share, Kesoram claimed that the new RP overturned the decision. They argued that the RP lacked the authority to revisit accepted claims. The partner firm cited a post-deployment loan bifurcation with Birla Tires as the basis for its claim. The court adjourned proceedings to early December, urging Kesoram to explain how their intercompany loan qualifies as a financial claim against Birla Tyres.
Request from Manav Investment and Trading Company Ltd:
The company challenged the resolution, arguing that workers were not paid equally with financial creditors, and the plan violated IBC provisions. The RP disputed, claiming that Manav Investment was not an injured party or creditor, and questioned its position in representing workers who did not approach the court. The court adjourned the hearing to early December, seeking an affidavit from the RP.
What these mean for Birla Tires
These pleas assume significance as there is still no clarity on the company’s business revival even post-acquisition by Dalmia Bharat Group. The fate of the Birla Tires workers hangs in the balance due to the alleged unilateral rejection of their claims by the resolution professional in the approved resolution plan.
In May 2022, SRF Ltd, a functional creditor, initiated insolvency proceedings for Birla Tyres, indebted over ₹1100 crore to creditors, including Axis Bank, State Bank of India, ICICI Bank, and Yes Bank.
Various expressions of interest were received from potential candidates, including Ceat, Bain-Piramal-backed India Resurgent Fund, Jindal Steel & Power, Bommidala Enterprises, Purnendu Chatterjee-promoted MCPI, and Himadri Specialty Chemicals to acquire the company.
Following NCLT’s approval, the consortium of Himadri and Dalmia reportedly took physical possession of the plant and machinery of Birla Tires in Balasore, Odisha, after completing the transaction with the creditors. Later, the shares of Birla Tires were also delisted from the stock exchanges.
Established in 1991 as a subsidiary of Kesoram Industries, Birla Tires became a separate entity in 2019 after being separated from its parent company.
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Updated: 24 Nov 2023, 17:37 IST