Months after the State Bank of India (SBI) attempt to attract investors at an auction to sell Rs 1,703 crore debt of Hindusthan National Glass & Industries (HNGIL), the COC (Committee of Creditors) are seeking solution with Independent Sugar. The current resolution plan in favour of SRA was filed in NCLT by COC on 5th November 2022.
As per the information shared by the sources with ETBFSI, Independent Sugar Corporation (INSCO) Limited, a Bermuda-based entity owned by the Madhvani Group, has been making consistent efforts at various authoritative positions to acquire the insolvent Hindustan National Glass & Industries Limited.
However, there are some points in the resolution plan of INSCO that raises concern.
According to IBC legal precedence, it is remarked by SRA lawyers and experts that there is no locus available to any unsuccessful resolution application until the resolution process with the SRA (Successful Resolution Applicant), here, AGI Greenpac, is concluded.
As per the resolution plan submitted by INSCO to COC through the Resolution Professional (RP), there are points that show that the resolution applicant neither commits to pay to unsecured financial creditors, operational creditors nor provides continuity of employment to the current 5000+ employees.
“All officers, employees and workmen of the Corporate Debtor along with all liability of the Corporate Debtor towards them including their employment benefits shall stand terminated and discharged in accordance with the terms of their respective contracts, without any additional liability on the Corporate Debtor, subject to applicable statutory and regulatory provisions,” the resolution copy submitted by INSCO said.
“The Corporate Debtor/Resolution Applicant shall enter into new employment contracts for appointment of its officer, employees and workmen as per its requirement and policies shall also have the right to stipulate the new terms on case to case basis, in accordance with law,” the further read.
CCI’s clean chit to INSCO
In February this year, the Competition Commission of India (CCI) has given a clean chit to INSCO for its green channel approval for the proposed acquisition of the HNGIL.
Notably, INSCO entered the race for the acquisition of HNGIL through CIRP proceedings and had applied under FORM 1 (Green channel) from CCI. INSCO secured the green channel approval in September 2022. This made INSCO the sole qualified bidder for the acquisition of India’s largest glass company HNGIL. However, the same is being challenged by SRA.
As per the recent reports, in the HNGIL case, due to the inordinate delay, the Committee of Creditors (CoC), which comprises public sector banks primarily led by SBI, has been incurring a loss of Rs 30 crores per month.
So far, they have collectively incurred a loss of Rs 840 crores since the resolution process of HNGIL has been pending since 2021.
In October 2022, country’s largest glass bottle maker, the Kolkata-based HNGIL received resolution plans from AGI Greenpac and Madhvani Group. 98% of lenders voted on a Rs 2,213 crore plan by AGI Greenpac while the INSCO received 88% of votes.
A glance at INSCO background
If we take a glance at the INSCO, concerns arise due to its alarming history of financial misconduct, labour exploitation, environmental violations, and opaque governance.
In the past, the World Bank has been investigating INSCO and its Madhvani Group owners for “grave irregularities” in the conduct of business, regarding a contract with Kakira Sugar Works (KSW).
This includes irregularities, including double-invoicing, over-invoicing, and ineligible payments amounting to over US$ 500,000.
Further, there are also reports of INSCO blamed for environmental violations, resulting in several fines and penalties.
The Madhvani Group has also been accused of large-scale land grabbing.
Madhvani Group with backing of government, was given over 40,000 hectares of communal land in northern Uganda to establish a sugar cane plantation and build a sugar factory.
There were reports that said there was a thriving school of thought among civil society that believes government and Madhvani have entered in secret deals with some foreigners to grow sugar cane for agrofuels.
Given Madhvani’s background and resolution plan, it’s uncertain whether the group’s fate will turn in their favour with this acquisition. The unfavourable resolution for financial and operational creditors, coupled with their tainted background, adds to the uncertainty.
The Supreme Court’s pending verdict on the AGI resolution plan leaves room for speculation. Additionally, on 23rd July Supreme Court has admitted all 14 cases and given next date of hearing on 16th October’2024. Until the verdict is delivered, the only certainty is the wait; time and fate will ultimately decide the outcome.
