The role of another insolvency resolution (RP) professional, Girish Juneja, came under the scrutiny of the Committee of Creditors (COC) of Hindustan National Glass (HNG), one of the oldest and major container glass manufacturing companies in India. This is after Justice NV Ramana, the former Chief Justice of the Supreme Court (SC), issued an opinion last month that the PR’s actions may have given an unfair advantage to a party AGI Greenpac, who is in the running to acquire the company. Sources close to the CoC said the committee members were in possession of Ramana’s opinion on the RP. PRs were given broad powers to ensure the takeover of insolvent companies.
The resolution of HNG’s insolvency, which could potentially fetch over Rs 2,000 crore, began in January 2022 but sparked controversy after the CoC selected a large bidder who did not have the unconditional approval of the Competition Commission of India (CCI). On May 30, Judge Ashok Bhushan of the National Company Law Appellate Tribunal (NCLAT) suspended the transaction process for HNG and ordered authorities to “delay the application for approval of the plan” on the grounds that it was “necessary to decide on the correctness of the two ICC orders before the process is allowed to proceed any further”.
Email queries were sent to at least 10 people, including RP Juneja and CoC members, which went unanswered.
Bidding parties for HNG were required to have unconditional prior clearance from the ICC for the acquisition, a rule which was set by the PR himself via an email sent to all bidders. But at the time of awarding the contract, a party that had not yet received any clearance from the CCI and whose application was not even pending before the CCI was selected by the PR, who then continued the process.
Why shine the spotlight on RP?
“The actions of the PR gave AGI an unfair advantage. submission of its final resolution plan, the decision taken by the PR was emphatically only in favor of AGI being the only bidder who did not have an endorsement from the ICC,” Ramana said in his notice granted to this topic last month.
Interestingly, Ramana also stated that AGI’s resolution plan would not have been eligible for a vote in the first place because as of the date of submission of the plan as well as the vote, AGI had no claims pending before the ICC. . “Yet the RP placed the utmost confidence in AGI’s resolution plan. There is merit in the arguments that the RP’s actions were to give particular preference to a bidder and that the same should be reviewed by the NCLT under CIRP Rule 36 and widespread precedents,” Ramana said.
Wrong approval
RP must present the best resolution plan for the beleaguered companies to the NCLT for final approval.
Ramana said on September 26 that PR Juneja, contrary to his own decision, submitted the AGI resolution plan to the NCLT without the approval of the ICC. Additionally, prior to October 28, the day the CoC approved the RP submission, AGI’s Form-I request to the ICC had already been deemed “invalid” by the commission. Later, on November 5, when AGI’s plan was submitted for NCLT approval, the company did not have ICC approval for its plan since it had only submitted a Form II application. November 3 when Form I was deemed invalid.
Prior to the filing of the resolution plan with NCLT, PR Juneja on August 28 watered down the requirements of the RFRP (request for resolution plan) to suit AGI and said that ICC approval for the takeover could be obtained after approval of the plans by the CoC but before application to the NCLT. This was done without any CoC approval and discussion about it, Ramana noted.
The mystery of ICC conditional approval
TCC Order dated March 15, 2023 reveals that the TCC is of a prima facie view that the combination of HNG and AGI is likely to cause a “material adverse effect on competition” in all packaging in packaging glass in general and in the alcoholic beverages and F&B sub-segments in particular.
However, CCI proposed changes by AGI that involved the divestment of HNG’s Rishikesh plant, which AGI said would reduce the impact on competition. Thus, the ICC only granted license to AGI on the basis of this modification.
“The amendments were only submitted (by AGI) on March 10 and 14 and the ICC order was adopted on March 15. It is therefore clear that the ICC order is entirely based on the submission of ‘AGI and that it has not had the opportunity to verify and review AGI’s submissions, if found to be untrue, would render the basis for the TCC’s order erroneous and subject to reversal’ , noted Ramana.
Further, since AGI’s plan was not disclosed to the RP, CoC when the resolution plan was submitted and voted on and on the date the RP filed the application with the NCLT for approval. final, this is clearly a case of non-disclosure and concealment by AGI. This would amount to a misrepresentation, Ramana noted. “A resolution plan discussed and approved on the basis of such non-disclosure should be rescinded and returned to the CoC as contrary to various sections,” Ramana said.
Is conditional approval allowed?
“There can be no conditional approval of a resolution plan and the plan cannot be approved subject to receiving clearances from CCI,” Ramana said.
The former CJI relied on an SC judgment in Ebix Singapore v/s CoC of Educomp Ltd where it was held that a resolution plan conditional on future events/negotiations could not be approved in its current form. The acquisition of HNG would result in direct horizontal overlaps as well as vertical overlaps and attract the rigors of Section 5 of the Competition Act, he said. Further, the amendments would involve the closure of factories and the HNG workers’ union has also filed various complaints with the Head of the Indian Insolvency and Bankruptcy Board, Comptroller and Auditor General, Ministry of Finance, SEBI and other regulatory and investigative bodies raising concerns about the role of the PR and the controversial process followed.
