Binani creditors' forum seeks forensic audit of resolution

The Binani Operational Creditors Forum (BOCF) today said it has sought a forensic audit of the insolvency resolution process of debt-ridden Binani Cement due to an alleged lack of transparency and step motherly treatment to Micro, Small & Medium Enterprises (MSME) players. The forum has filed a petition in the Supreme Court calling for a forensic audit of the process. The petition will come up for hearing next Thursday. Binani Cement owes about Rs 7,000 crore to financial and operational creditors. Even though Dalmia Bharat, with its offer of Rs 6,350 crore, had been voted as the highest bidder by lenders, things took a turn when Binani Industries approached UltraTech to buy out its stake in Binani Cement for Rs 7,618 crore, involving 100 per cent payout to both secured and unsecured lenders.

The hearing of Operational Creditors (OCs), who are backing a higher offer by UltraTech Cement and the promoters of Binani Cement, will come up for hearing in the Supreme Court on April 19. The Binani Operational Creditors Forum (BOCF) are expecting SC to grant a stay on the Binani Cement insolvency process and protect over 3,000 OCs.
"In Binani's case, maximum number of petitions have been filed by OCs, as the Resolution Professional (RP) is completely disrespecting the law by subverting the claims of the OCs and misusing the judicial powers granted by the government," BOCF spokesperson Rajesh Tibrewal told PTI here.

The OCs have alleged that the RP has connived with the bidder by sharing exclusive information and has defeated the very purpose of the IBC code by driving down the value of the asset. "We demand a forensic audit," Sandeep Samdani, another spokesperson of BOCF, said. According to BOCF, the total exposure of OCs is Rs 700 crore and they are expected to get only about Rs 151 crore if the bid from Dalmia Bharat goes through.

"Most of the OCs have bank loans against their exposure to Binani. If the offer by Dalmia Bharat is accepted, then we will get just 1/5th of our exposure to Binani. This would mean that we will not have money to pay our banks and we will default on payments," Samdani said. "So if these state-run banks settle for a 'haircut' in case the Dalmia Bharat-Bain-Piramal consortium offer is accepted, then these banks will lose about Rs 400 crore more, as OCs will default. This will be a double whammy for banks," Samdani added.

Binani Industries, the parent company of Binani Cement, had earlier offered to pay off 100 per cent of its dues to creditors, including operational creditors, and had pleaded for termination of insolvency proceedings at the Kolkata Bench of NCLT. On March 19, Binani Industries had entered into an in-principle understanding with UltraTech Cement, which agreed to acquire 98.43 per cent stake in the cement unit for Rs 7,266 crore 'subject to termination' of insolvency proceedings The offer by Dalmia Bharat consortium is Rs 6,350 crore.