Asian color: can lenders afford a new ‘coat’?
Can lenders initiate new bids for a distressed asset after announcing the best buyer in the previous round of offers under the Insolvency and Bankruptcy Code? This will be the key issue for the National Company Law Court in a case related to Asian Color Coated Ltd (ACCL).
JSW Steel was the top bidder for the bankrupt company with a bid of 1,550 crore. Although this offer is pending final approval from NCLT, a US fund Interups Inc has offered a higher price.
ACCL’s resolution professional declined to consider the US firm’s new proposal despite being far superior to JSW Steel’s, sources said.
The question is therefore whether the offer of Interups should be considered.
Babu Sivaprakasam, Partner, Economic Laws Practice, said it is beyond the competence of the resolution professional or creditors committee to accept a new offer at this point when they have already approved a successful bidder and submitted a compliant resolution plan to NCLT. Considering new offers at this stage will seriously undermine confidence in the sanctity of the process established by the Code and will also set a bad precedent, he added.
Nadiya Sarguroh, senior partner, MZM Legal, however, said the COC has the absolute right to reject or accept one or more resolution plans before approval by the decision-making authority, considering that another resolution plan could have better feasibility and commercial viability.