Creditors probed for rationale behind NOCL’s liquidation value

This is so that the CoC can explain the “high and wrong” liquidation value on the grounds that the resolution professional (RP) cannot mislead CoC and NCLT, revealed a source.

Noting that the RP is in collusion with the local branch level officers of the lead bankers – SBI and IDBI, who attend the CoC meetings, the source said, it was ‘ludicrous’ to peg the value of NOCL at Rs 1,400 crore, when a running listed company Adhunik Metaliks was valued at only Rs 500 crore. As a result, it was settled for Rs 500 cr by the Lenders for Liberty House of UK. The same lenders want NOCL to be liquidated despite having two credible bidders, the source further contended. Incidentally, NOCL is the only ‘project’ level company, among the 700-odd companies that is under the scanner of the Insolvency and Bankruptcy Code (IBC). Haldia Petrochemicals, a petitioner had drawn the attention of the NCLT challenging the basis for liquidation. 

NCLT Chennai Bench on Tuesday, held that “…the applicant has raised objection with regard to the decision of the CoC by which the Resolution Plans have been rejected. The Counsel for the Applicant also raised an issue with regard to the liquidation value of the Corporate Debtor... It is necessary to provide an opportunity to the CoC to defend their decision by providing the relevant inputs/grounds on which Resolution Plans have been rejected.” 

Mohd Sharief Tariq, member (judicial), in his order said the CoC must provide the basis on which the liquidation value of the assets of the Corporate Debtor had been determined.