Calcutta: The promoter of Gujarat NRE Coke, a company in liquidation after failing to find a resolution plan under Insolvency & Bankruptcy Code, 2016, has proposed a scheme under Companies Act, 2013 to revive the company.

Four back-to-back meetings of all stakeholders - shareholders, foreign currency convertible bond owners, unsecured and secured creditors - have been called on July 16 under the direction of the company law tribunal to consider the scheme. Under the provisions of sections 230 to 232 of the Companies Act, 2013, the scheme will be effective if all stakeholders approve it with a three-fourth majority (75 per cent).

Arun Kumar Jagatramka, the promoter shareholder of Gujarat NRE Coke, once India's largest non-captive metallurgical coal maker, said the proposed scheme would be beneficial to all stakeholders, compared to a liquidation.

"We are probably one of the first companies to revive the business by this provision of Companies Act, 2013. I'm sure every stakeholder, including secured creditors, will find the scheme more attractive than a liquidation," he said.

The company expects shareholders, unsecured creditors and FCCB holders to approve the scheme with requisite majority given that they would not earn anything if Gujarat NRE goes for liquidation. By the time the meeting of the secured creditor takes place, results of all other meetings would be known, as it has been slotted last during the day.

Composite scheme

A composite scheme of compromise and arrangement between Jagatramka and the creditors and shareholders of Gujarat NRE calls for a write-down of the equity capital of the company, fresh issue of ordinary equity shares and preference shares thereafter to secured, unsecured creditors and FCCB holders.

It also calls for paying off Rs 500 crore loan of the secured creditors over 10 years with 8.1 per cent interest by an equated yearly scheme. Following the implementation, lenders' stake will go up to 38.83 per cent from 32.39 per cent, while promoters stake will fall from 25.61 per cent to 17.52 per cent.

Secured creditors, which had Rs 3501.16 crore admitted claim, will get Rs 40 crore new shares of face value Re 1 and Rs 2961 of preference shares redeemable by a bullet payment after 20 years. The liquidation value of the company is Rs 350 crore. Jagatramka said the company would be able to generate enough cash flow to service the debt as well as provide potential upside to the shareholders.

"There are three plants employing 1,200 employees," he added.

The company went into liquidation in January. However, Jagatramka has earned a stay on the liquidation from the appellate company law tribunal on liquidation.

The promoter, in association with PricewaterhouseCoopers, had prepared a resolution plan under IBC.

But the amendment of November 23, 2017 barred promoters for putting up a plan without paying overdue amount. The company was sent to liquidation in January. Jagatramka has earned a stay on the from the appellate company law tribunal on liquidation. Meanwhile, he is testing the provision of Companies Act to revive the company.