Haldia’s ₹600 crore scheme to takeover Nagarjuna gets nod

Haldia Petrochemicals would take over Nagarjuna Oil Corporation Ltd. (NOCL), as per the ₹600-crore scheme of arrangement approved by the National Company Law Tribunal, Chennai.

As per the scheme, secured lenders would get ₹560 crore, or about 6% of their total admitted claims of ₹9,864.16 crore. Lenders include State Bank of India, IDBI Bank, Canara Bank and Syndicate Bank, among others.

NCLT had ordered the liquidation of NOC, after none of the resolutions got through. Later, Haldia submitted a resolution plan under section 230 of Companies Act. Section 230 of the is a mechanism to ensure institutional settlement of disputes between creditors and the company. It ensures that the company has a chance to save itself from insolvency or liquidation by entering into a deal with at least a majority of creditors.

Meanwhile, other claimants are unlikely to get any amounts towards their claims, including statutory authorities, barring priority payments payable as per Section 53 of the Insolvency and Bankruptcy Code 2016. The shareholders’ equity of ₹1800 crore also gets wiped out.

According to a source, the banks get to recover ₹560 crore out of the principal amount of ₹2,200 crore, which is about 25%. The interest is high because the account turned NPA long before it was referred to the NCLT.

In September 2019, Haldia Petrochemicals signed an MoU with the Tamil Nadu Government to invest almost ₹50,000 crore in Cuddalore district, by converting the NOCL facility into a refinery-cum-petrochemical complex.