A stay order ahead of a crucial meet of the lenders and shareholders of Gujarat NRE Coke Ltd has cast shadow on the future of the debt-laden firm which found no takers under the IBC.
The company said Jindal Steel & Power Ltd, an unsecured creditor with only 0.5 per cent of the total debts of Gujarat NRE Coke, has obtained an ex-parte order from National Company Law Appellate Tribunal (NCLAT) on July 12 to stay the meetings which were scheduled on July 16.
Gujarat NRE Coke had failed to get any suitor for resolution under the Insolvency and Bankruptcy Code (IBC) as an ongoing concern as no plan was accepted by its secured creditors.
Gujarat NRE Coke promoter A K Jagatramka had then submitted a scheme under Section 230 of the Companies Act before the National Company Law Tribunal (NCLT) to revive the firm, which employs 1,100 people.
The scheme would have required at least 75 per cent voting in favour from secured creditors, FCCB holders, unsecured creditors and shareholders.
All the three meetings for voting were slated on July 16.
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"I am always optimistic," promoter cum chairman and managing director A K Jagatramka told PTI reacting to the developments.
"I am confident that with proper representation we shall satisfy NCLAT with the macro and social benefits of the scheme, which is fully within the four boundaries of law, and due democratic process will triumph," he added.
The company claimed no notice was served to the respondents.
The beleaguered metallurgical coke producer owes about Rs 5,000 crore to secured and unsecured creditors while the liquidation value of the company was put at Rs 350 crore. The company had voluntarily moved the NCLT last year.
According to the proposed scheme, the promoter family of Jagatramka has promised to repay Rs 3,501 crore of secured financial creditors through a mix of long term debt and equity, reducing the company's equity shares by 90 per cent and paying part of FCCB holders and unsecured creditors as settlement.
As per the scheme, Rs 3,501 crore is to be converted into Rs 500 crore of term loans to be repaid over 10 years at 8.1 per cent interest rate; Rs 40 crore worth of shares of face value of Re 1, and Rs 2,961 crore of Compulsory Redeemable Preference Shares of Rs 10,000 face value redeemable after 20 year at one go.
The unsecured creditors, with debt amounting to Rs 1,502 crore, would suffer haircut of 50 per cent, while the FCCB holders would see their investments reduced to 10 per cent, or Rs 13.99 crore, converted into shares.
If the plan sails through then Jagatramka has to shell out Rs 50.5 crore.
The Kolkata Bench of NCLT had accepted the scheme proposal by Jagatramka on May 15 and had ordered to convene a meeting of all the stakeholders on July 16.
Gujarat NRE Coke is one of the first few cases to be voluntarily referred to the Corporate Insolvency Resolution Process under the Insolvency abs Bankruptcy Code.