Mumbai: The lenders of Sterling Biotech Limited have agreed to a one-time settlement offer made by the promoters of the company and have decided to withdraw the resolution proceedings against the company. The banks have accepted Sandesara brothers’ offer of Rs 5500 crore which entails a reduction in the stated value of assets close to 65 per cent for the lenders.
In a statement to the bourses, the company said, “The e-voting on the resolution put to vote at the 14th meeting of the CoC of the Company concluded on Thursday, 07th March 2019 at (11:30 p.m. IST). In this regard, please note the Committee of Creditors has approved the withdrawal of the CIRP of the Company with requisite majority.”
The Gujarat-based pharma firm has been in controversy for quite some time as credit facilities to the tune of Rs 8,100 crore availed by the group were declared “fraud account” by banks. Multiple prosecution complaints and charge sheets have also been filed against the company which are pending before a special court.
The charge sheet, filed under the various provisions of Prevention of Money Laundering Act, accused company of taking loans from a consortium of banks led by Andhra Bank, which turned into non-performing assets. It said that the accused manipulated figures in the balance sheets of their flagship companies and convinced banks to sanction higher loans, reports Business Standard.
In connection with the alleged bank fraud, the CBI had booked its directors Nitin Sandesara, Chetan Sandesara, Dipti, Rajbhushan Omprakash Dixit and Vilas Joshi, along with chartered accountants Hemant Hathi and Garg, and some unidentified persons.
The case has been probed by various investigative agencies including Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and Enforcement Directorate (ED). In addition, the ED has also taken the CBI FIR into cognizance, reports The New Indian Express.
Medical Dialogues had earlier reported that a Delhi court issued open-ended non-bailable warrants (NBWs) against four directors of a Gujarat pharma firm in a Rs 8,100-crore money laundering probe case.
According to a report by Business Standard, the promoters of Sterling Biotech — Chetan, Chetan’s wife and Nitin Sandesara, as well as Hiteshkumar Patel, moved a Delhi court seeking cancellation of open-ended non-bailable warrants issued against them. The matter is pending for hearing on April 2.
A couple of months ago it was reported that the company’s promoters had fled the country. Following this, a Delhi court allowed the ED to go ahead with the process to extradition of four Sterling Biotech promoters who were suspected to be in Nigeria and Italy.
However, post those orders, the Sandesara brothers offered a one-time settlement to the lenders.
The promoters Chetan and Nitin Sandesara have reportedly roped in an overseas investor to reimburse the loans and plan to pay part of the outstanding amount to show that their intention is to clear the debt, a senior public sector bank executive told Business Standard.
“The promoter has already deposited 5 per cent of the OTS (one-time settlement) offer to banks,” the source told the daily.
In 2018, Sterling’s lenders led by Andhra Bank had moved National Company Law Tribunal against it.
While going in for resolution, the Indian lenders have the option either to recover, rectify or restructure the account. In this case, there is no issue of restructuring and is a case of recovery by way of sale of assets or settlement, a banker told the daily.
Lenders decided to withdraw the account from the National Company Law Tribunal after it was referred for debt resolution under the Insolvency and Bankruptcy Code (IBC), 2016 in June last year.
The banker said that the decision to take it out of NCLT was taken as the liquidation value would be far lower than the dues and the liquidation process will take a lot of time. Hence, in the CoC meeting held on March 4 and 5, lenders rejected a resolution to send the company for liquidation under the IBC.
The application for settlement was made under section 12A of IBC that gives an opportunity to promoters to make an offer for the firm if binding bids have not been submitted subject to 90 per cent of the lenders agreeing.