State Bank of India-led lenders have agreed to withdraw the petition against Oil Country Tubular (OCTL), India’s lone manufacturer of import substitute range of products for oil and gas drilling operations, more than two-and-a-half years after the National Company Law Tribunal (NCLT) ordered the corporate insolvency resolution process (CIRP) proceedings.
This provides a major relief to the promoters of the Rs 5,000-crore Kamineni group with interests in manufacturing, healthcare and medical education as they gain back management control over the company that was being managed by the Tribunal-appointed insolvency resolution professional for over two years.
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The OCTL managing director Sashidhar Kamineni told Moneycontrol that the promoters have successfully struck a compromise deal of one-time settlement (OTS) with all the lenders who have now agreed to withdraw the CIRP proceedings against the company.
Following this, the Hyderabad bench of the NCLT on September 21 ordered the withdrawal of CIRP proceedings against Oil Country, while relieving the insolvency resolution professional from his duties.
The resolution professional took control and custody of the management and operations of Oil Country on January 28, 2020, the day the NCLT had ordered initiating CIRP proceedings at the company after admitting the petition filed by the financial creditors led by SBI.
The Tribunal in its September 21 directives recalling the CIRP proceedings has noted that the corporate debtor (OCTL) has settled the dues of the financial creditors under OTS following which the creditors passed a resolution with 100 percent voting to withdraw the CIRP proceedings. “Hence, the Corporate Debtor (OCTL) is at liberty to function through the Directors as per law.”
Though Indian Bank and Indian Overseas Bank have been in favour of the OTS proposal and withdrew the CIRP proceedings against OCTL, it was SBI that changed its stand after initially accepting the proposal in the joint lenders’ meeting.
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As the compromise proposal has to be effectuated within 90 days from the date of commencement of the CIRP process, Oil Country had instituted the payment of the accepted OTS and even paid Rs 60.54 crore out of Rs 70 crore. However, SBI, though agreed to OTS initially, refused to accept the amounts and extend the time for balance payments.
Earlier on July 15, Justice B Vijaysen Reddy of the Telangana High Court ordered setting aside the decision of the SBI where the lender refused to accept the previously approved OTS proposal and to extend the time for payments. The court directed the lenders to look afresh into the OTS proposal approved earlier for payment of amounts beyond the stipulated time along with interest.
The Telangana High Court also found the stand of SBI as lacking transparency and clarity and the bank’s action in refusing to accept the OTS as “arbitrary, unreasonable and violative of Article 14 of the Constitution of India.”
Following this, the Committee of Creditors (CoC) at their meeting held on September 17 approved with 100 percent voting to accept the OTS proposal and conveyed to the NCLT their decision to withdraw the CIRP proceedings against Oil Country Tubular.
