NCLT Blesses Consortium’s Resolution Plan For Birla Tyres

India’s National Company Law Tribunal (NCLT) recently cleared the creditors-approved resolution plan of the Dalmia Bharat Refractories Ltd. and Himadri Speciality Chemical Ltd. consortium for bankrupt listed firm Birla Tyres Ltd.

“The resolution plan is binding on the corporate debtor and other stakeholders involved so that revival of the debtor company shall come into force with immediate effect,” the Kolkata bench of the NCLT said in its order dated 19 October.

The order was passed by the division bench of Judicial Member Bidisha Banerjee and Technical Member Arvind Devanathan.

The Indian tiremaker was admitted under the corporate insolvency resolution process (CIRP) in May 2022 following an application filed by its operational creditor and listed chemical firm SRF Ltd.

The company’s resolution professional had admitted liabilities of nearly 1,663 crore rupees ($200 million), including CIRP costs, against Birla Tyres, versus total claim of about 2,213 crore rupees, the NCLT order showed.

After seeking suitors under the CIRP, the company’s creditors declared Dalmia Bharat Refractories as the successful resolution applicant for Birla Tyres in August 2023 by a majority vote of 82.48%.

The wining winning bidder’s consortium later accepted the letter of intent and provided the requisite bank guarantee.

The consortium’s resolution plan entails total payment of 347 crore rupees to Birla Tyres’ stakeholders, according to the order. The stakeholders will get a total upfront payment of 182 crore rupees and the remainder amount as deferred payment.

Under the resolution plan, the company’s existing listed shares are proposed to be delisted from all stock exchanges, Birla Tyres said in a stock exchange announcement last week.

Birla Tyres, promoted by Kesoram Group, was founded in 1991 with the technical collaboration with Italian tire manufacturing major Pirelli. The company’s manufacturing plant is located in Balasore, Odisha.

The company’s clients include Bajaj Auto Ltd., Hero MotoCorp Ltd., Ashok Leyland Ltd and Tata Motors Ltd., according to its website.

Note: $1 = 83.2016 Indian rupees)

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