Haldia Petro withdraws appeal seeking participation in NOCL revival

With this, the interim stay on the liquidator calling for expression of interest for the revival of the project is expected to proceed to the next stage

Haldia Petrochemicals yesterday withdrew an appeal filed with the National Company Law Appellate Tribunal (NCLAT) seeking its direction to participate in the resolution and revival process of Nagarjuna Oil Corporation Ltd (NOCL), which is carrying out a 6 million metric tonnes per annum (MMTPA) petroleum and oil refinery project in Cuddalore.

With this, the interim stay on the liquidator calling for expression of interest (EoI) for the revival of the project is expected to proceed to the next stage. The NCLAT had earlier issued an interim stay on the procedures based on Haldia Petrochemicals' appeal, according to sources.

NOCL had failed to get a successful resolution plan in the Corporate Insolvency Resolution Process (CIRP) and in December 2018, the National Company Law Tribunal (NCLT), Chennai, ordered liquidation of the company, which is an associate of Nagarjuna Oil Refinery Ltd (NORL).

Considering that the project could still go on if properly funded and managed, there is one more opportunity for the revival of the company through a scheme that has to be selected by the liquidator. 

Haldia Petrochemicals approached NCLAT alleging that certain conditions have been imposed during the submission of the scheme, which was not similar to the conditions that were imposed for the resolution plan. This was denied by the liquidator's counsel.

The NCLAT bench observed that such issues can be raised only when its scheme has not been accepted or some other scheme is given preference over it. 

The liquidator has to invite EoIs and finalise a scheme submitted by any interested company, after considering various aspects. IBC's liquidation sections provide for a revival through a competitive bidding process on "as is where is" basis, said sources.

It may be noted Haldia Petrochemicals and GP Global were the two investors in the final round of resolution plan discussions earlier, but the proposals fell short of the liquidation value of Rs 1,450 crore, as reported earlier. There are around 15 lenders for NOCL.

NOCL, a joint venture of Hyderabad’s Nagarjuna Fertilizers & Chemicals Ltd (NFCL) and TIDCO of Tamil Nadu government, is carrying out a 6 million metric tonnes per annum (MMTPA) petroleum and oil refinery project in Cuddalore, almost 200 kilometers south of Chennai, which is stalled due to shortage of funds.

The project, for which the construction work started in 2009, had been partially completed in December 2011, when a cyclone and shortage of funds stopped work. The plant has the capabilities of meeting Euro VI requirements with some additions. According to earlier reports, the company has around Rs 90 billion of debt, of which around Rs 80 billion is bank loan, from 15 banks. Once the recovery is made and the vendors, employees and other are repaid, the shareholders would be paid based on the approved mechanism.