Vadraj Cement Undertakes Debt Resolution: A New Hope for Lenders
In a noteworthy turn of events, Vadraj Cement, which had been stuck in liquidation for over five years under the Bombay High Court, has finally been moved to the National Company Law Tribunal (NCLT). The company is now in the process of debt resolution, triggering a renewed sense of optimism amongst lenders who believed its debts to be irrecoverable.
A Shift from Liquidation to Debt Resolution
The NCLT recently accepted Vadraj Cement for corporate insolvency proceedings, propelling the cement company into a renewed struggle involving prospective bidders like the Adani Group, UltraTech Cement, and JSW Cement. The Bombay High Court had previously ordered the dissolution of Vadraj Cement on August 23, 2018, due to a lawsuit involving Beumer Technology. But a successful appeal from JC Flowers Asset Reconstruction Company (ARC) on August 18, 2023, overturned the dissolution order.
Pulkit Gupta Appointed as Interim Resolution Professional
In its latest action, the NCLT has nominated Pulkit Gupta, supported by EY, to serve as the interim resolution professional. It issued a directive to official liquidator Chandan Kumar to surrender all Vadraj Cement assets to Gupta. Interestingly, ABG Shipyard, Vadraj Cement’s parent company, had also been through a corporate insolvency process but could not find any interested bidders, leading to the sale of its assets to the Welspun Group and Arcelor Mittal.
Parent Company Under Investigation
Currently, Rishi Agarwal, the promoter of ABG Shipyard, and the shipyard itself are under scrutiny for alleged instances of bank fraud. Claims have been made about the diversion of bank loans to offshore tax havens. Our sources disclosed that the Enforcement Directorate seized assets totaling ₹952 crore from Vadraj Cement, under the Prevention of Money Laundering Act. It was also reported that the official liquidator initially resisted the idea of handling the company’s debt resolution under the Insolvency and Bankruptcy Code, a detail that was highlighted by the NCLT’s recent order.
