UltraTech Cement, which is in a legal battle to acquire bankruptcy-hit Binani Cement, has agreed to bear the costs arising out of the unending series of litigation on behalf of the lenders and the Committee of Creditors (CoC).
The lenders had expressed concern about the rising costs of proceedings, while approving UltraTech’s offer. They have put the onus on UltraTech to pay for the cost. The company agreed after some negotiations, sources told Business Standard.
But only because UltraTech challenged the Binani Cement case and expressed its desperation for acquisition, has the case been dragging for so long,” the source said.
The former highest (H1) bidder – Rajputana Properties, led by Dalmia Bharat – is also not leaving any stone unturned and has made a series of allegations in the National Company Law Tribunal (NCLT), the National Company Law Appellate Tribunal and the Supreme Court.
Executives of the company had indicated the firm would go to the Supreme Court to reinstate itself as the successful bidder and overturn the NCLT’s decision on the Binani Cement.
Calls and messages sent to an UltraTech executive went unanswered.
Before UltraTech moved the NCLT, opposing the selection of Dalmia Bharat as the H1 bidder, the resolution cost of Binani Cement stood at around Rs 6.5 million, which went up to Rs 8-9 million by mid-April. By the time the Kolkata Bench of NCLT passed its verdict ordering the CoC to consider UltraTech’s plan, the resolution cost neared Rs 1 billion.
After the litigation was discussed in the Supreme Court and the NCLAT, the consolidated resolution cost has touched Rs 1.3 billion, making this case one of the costliest.
During most the litigation, the CoC is represented in the court which raises their legal overhead cost. Lenders are certain the final outcome will be decided only by the apex court.
Based on these arguments, lenders suggested UltraTech up its offer by another Rs 150 million so that the legal costs can be recovered by the CoC and then shared among the lenders.
A second source, opposing the takeover of the Dalmia Bharat-led consortium said it made the case stronger for UltraTech as advocates representing the CoC could seek guidance from the top advocates UltraTech has hired and hence a faster resolution can be arrived at.
In cases escalating to the Supreme Court, Mukul Rohatgi, former attorney general of India, has been appointed by UltraTech, while Dalmia Bharat has selected Gopal Subramanium, former solicitor general of India.
“What can we do if the lenders seek financial support from UltraTech for the case? One needs to check if it is legally permissible,” a source close to Dalmia Bharat said.