The Amaravati bench of the National Company Law Tribunal (NCLT) ordered corporate insolvency resolution process (CIRP) at Andhra Cements while hearing a petition filed by the financial creditor Pridhvi Asset Construction and Securitisation Company (Paras).
The order dated April 26 by Justice Telaprolu Rajani, the judicial member of NCLT’s Amaravati bench, was uploaded on April 28.
Andhra Cements, the Jaypee group-owned cement manufacturer headquartered at Guntur in Andhra Pradesh, had availed credit facilities from several banks including IDFC First Bank, HDFC and Karur Vysya Bank from 2012 to 2016.
Later, Edelweiss Asset Reconstruction Company acquired the loans and underlying security interests held by two of the original lenders, IDFC First Bank and HDFC, through agreements in March 2017 and March 2021.
The current financial creditor Paras has subsequently acquired the loans of Rs 804.72 crore held by Edelweiss and Karur Vysya Bank.
Claiming that Andhra Cements failed to abide by its repayment obligations, Paras moved the Tribunal seeking to initiate the CIRP proceedings.
Andhra Cements, while admitting the debt and the default, submitted to the Tribunal that it couldn’t operate the plant above 60% of capacity utilisation for want of working capital and that it sought additional support from the financial creditor to revive the operations.
Justice Rajani, while noting that the reasons put forth by Andhra Cements for not being able to discharge the debt, unfortunately, cannot be considered within the framework of the Insolvency and Bankruptcy Code, said the provisions of IBC require default on the part of the corporate debtor for initiating the CIRP proceedings.
Accordingly, the Tribunal ordered appointing Nirav Kirit Pujara as the insolvency resolution professional and to complete the corporate insolvency resolution process within 180 days.Informing the bourses on the order of the NCLT and a public announcement on the CIRP proceedings on April 28, the interim resolution professional of Andhra Cements said claims with proofs were invited from the creditors to be submitted before May 10.