Lenders may re-evaluate Sterling Biotech's one-time settlement plan

Sterling Biotech owes close to Rs 8,100 crore to the banks and the offer entailed 65 per cent haircut for the banks

Lenders to Sterling Biotech are seeking legal views on whether they can withdraw their decision to clear the one-time settlement plan for the stressed asset after getting a rap from the National Company Law Tribunal (NCLT) for accepting the offer from promoters who have fled the country.

Sterling Biotech owes close to Rs 8,100 crore to the banks and the offer — made by the promoter Sandesara family under Section 12A of the Insolvency and Bankruptcy Code (IBC) — entailed 65 per cent haircut for the banks.

After accepting the offer on March 8, the lenders had made an application to the Mumbai Bench of the NCLT, seeking to withdraw IBC proceedings against the company.

 

The NCLT said since authorities like the Central Bureau of Investigation and the Enforcement Directorate are searching for the promoters, the tribunal would have to take their views before giving any order. The NCLT has also sought views from the Reserve Bank of India, the Securities and Exchange Board of India and the Serious Fraud Investigation Office.

The NCLT will hear the case again on March 26.

“The recovery in the case of Sterling Biotech is far better than Alok Industries, where the haircut was as high as 85 per cent,” said a banker close to the development. Haircut is the amount bankers let go from the dues of a defaulter to settle the account.

According to IBC rules, the banks offer the company to the highest bidder to get their dues. But in the case of Sterling Biotech, 90 per cent of the lenders agreed to the offer made by the promoters so as to get their dues back before March end.

The company’s auditor report said as of December 31, 2018, the company was carrying loans, borrowings and external commercial borrowings of Rs 7,845.94 crore from various banks, financial institutions, preference share capital and other parties. Post IBC, financial creditors made claims of Rs 15,013 crore. The resolution professional admitted claims worth Rs 9,035 crore up to February 5, 2019.

The report said during the period ended December 2018, the company had deferred tax asset of Rs 2,161 crore. “In the absence of reasonable certainty on realisation of this asset against future taxable profits of the company, we are unable to comment on the carrying value of this asset in the statement,” the auditor said, adding that the management has provided for impairment of various assets for Rs 4,42,9.95 crore under exceptional items in the accounts statement.