Nagarjuna Oil Corporation (NOCL) has filed for bankruptcy. The oil to fertiliser giant which is been promoted jointly by the Hyderabad-based Nagarjuna Fertiliser Group (NFCL) and state-run TIDCO (Tamil Nadu Industrial Development Corporation) has filed for bankruptcy under the ‘Insolvency and Bankruptcy Code (IBC)’. The other major shareholders includes Tata Sons ,Tata Petrodyne and Trafigura.
The company was in the process of setting up a 6 million tonne per annum petroleum refinery at Cuddalore but the attack of “Thane” storm had forced the company to evacuate some 5,000 construction workers o December 30,2011. The refinery did not suffer any damage during this natural disaster but oil tans and marine jetty did suffer some damages. The company which is suppose to have got fresh funds from Netoil Singapore did not get them as expected and hence the unpaid vendors filed winding up cases in the Madras High Court, which were transferred to the newly formed National Company Law Tribunal (NCLT), Chennai Bench, after the IBC came into force last year.
NOCL has an attractive incentive scheme under the ‘New Industrial Policy of TN’. As per this scheme, NOCL is bound to get Rs 12,400 crore as VAT refund as a soft loan to be repaid after 16 years and all the production that is done will be consumed in the domestic market.
The Chennai bench of NCLT has allowed the appointment of an Interim Resolution Professional (IRP) under the IBC 2016, allowing the petition of Sulzer India, which is one of the vendors since the NOCL failed to receive any investments from Netoil Singapore and has also accepted the proceedings towards Insolvency and Bankruptcy. As a result of this, recovery actions by lenders under SARFAESI Act etc. will be kept under abeyance, the board of directors of NOCL will be suspended and the management has to work under IRP. The IRP will have to follow a quick and transparent process to find a new investor, by an open bid.
The IBC gives 180 days to implement a resolution process and a one-time extension of 90 days. If no resolution is achieved even after 270 days (9 months), NCLT will appoint a liquidator to wind up the company, dispose off the assets and distribute the proceedings as laid down in IBC.