The Chennai Bench of the National Company Law Tribunal (NCLT) has asked creditors of Nagarjuna Oil Corporation Limited (NOCL) to suggest some acceptable modification and improvements to the resolution plan submitted by Haldia Petrochemicals.
The 270 days time-frame for finding a resolution plan under the Insolvency and Bankruptcy Code (IBC) for the company ended in April. The committee of creditors had rejected the bids of Haldia and Gulf Petrochemicals, saying these were below the liquidation value of ₹1,450 crore. However, both firms challenged this in the NCLT. On October 5, NCLT rejected the resolution plan submitted by Gulf Petrochemicals as it neither complied with certain legalities, nor provided for settlement of creditors other than financial, according to sources.
‘No basis’
The tribunal also observed that liquidation value was not envisaged in IBC as a basis for acceptance or rejection of a bid.
During the hearing, lenders insisted on increased upfront payment by Haldia and a guarantee for cumulative payment by Haldia to be equal to a liquidation value of ₹1,450 crore.
The NCLT has given final opportunity for the creditors to suggest acceptable modifications to Haldia’s bid and has posted the case for hearing on October 23.
NOCL was setting up the refinery in Cuddalore on the East Coast. Time and cost overruns resulted in the ₹3,500-crore project, intended to start in 2012, growing to ₹15,000 crore.
In December 2011, the project site was hit by a cyclone and work was stalled. The total investment in the project at that time was estimated at ₹8,000 crore, including ₹4,500 crore expenditure and ₹3,500 crore interest. A consortium of 17 banks, which funded the project, was to have brought in an additional ₹7,000 crore debt as part of a restructuring which did not materialise and insolvency proceedings was initiated against it. The project was one of the biggest project for Tamil Nadu and the state government had offered tax incentives for it during the Global Investors meet held in 2015.
