Court battle looms over Asian Colour Coated as bidder plans to move NCLT

RP rejects fresh EoI by Interups Inc, says JSW offer pending with NCLT

Yet another legal battle over India’s bankruptcy laws is brewing with the resolution professional (RP) of Asian Colour Coated Ispat (ACCIL) rejecting a fresh expression of interest (EoI) for the company after JSW Steel failed to pay after winning the race in June last year. 

The new bidder, Interups Inc of the US, plans to move the National Company Law Tribunal (NCLT) to force the RP and the company’s lenders to consider its offer. ACCIL had defaulted on Rs 5,000 crore worth of bank loans. JSW Steel had made an offer of Rs 1,550 crore for the company which was approved by the lenders.

The NCLT has not approved the resolution plan submitted by subsidiary JSW Steel Coated Products yet and it remains subject to the outcome of several litigation. The insolvency process of ACCIL has not yet been completed according to the provisions of the Insolvency and Bankruptcy Code (IBC).

A source in Interups said as one of the key objectives of the IBC is maximisation of value of assets of the corporate debtor, its offer should be considered.

“Due to the time likely to be taken by the NCLT to consider the approval of JSW Coated’s resolution plan owing to pending legal proceedings as well as extension of the insolvency period on account of the lockdown imposed due to the outbreak of Covid-19, additional time is now available for achieving a successful resolution of ACCIL. Therefore, in keeping with the purpose of the IBC and to promote the best interests of all stakeholders of the corporate debtor, we request you to kindly accord us a fair opportunity to participate in the debt resolution process of ACCIL as a prospective resolution applicant,” an Interups official stated.

A JSW Group spokesperson declined to comment.

ACCIL has plants in Maharashtra and Haryana, with an annual capacity of 1 million tonnes. According to the lenders, they have already received feelers from potential bidders to acquire the company and fresh bids will be called in. JSW Steel also won the race for Bhushan Power and Steel by offering Rs 19,700 crore to Indian lenders and was in negotiations with lenders to close the transaction when the pandemic hit the country and a nationwide lockdown was announced. 

JSW is also awaiting results of the litigation initiated against the acquisition by former Bhushan Power promoters.

JSW already acquired Monnet Ispat for Rs 2,875 crore in 2018 under the insolvency and bankruptcy process. It has also decided to reduce its capex by 45 per cent to Rs 9,000 crore in the current financial year.