NCLT Mumbai Admits Section 7 Petition Against Sterling Oil Resources Limited For Defaults Of More Than Rs. 1655 Crores
Udai Yashvir Singh
20 May 2023 9:00 AM IST
The NCLT Mumbai bench comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member) has admitted a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) against Sterling Oil Resources Limited (“Sterling Oil”) and initiated Corporate Insolvency Resolution Process (“CIRP”) against it. State Bank...
The NCLT Mumbai bench comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member) has admitted a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) against Sterling Oil Resources Limited (“Sterling Oil”) and initiated Corporate Insolvency Resolution Process (“CIRP”) against it.
State Bank of India (“Financial Creditor”) had given Financial Debt to Sterling Global Oil Resources Private Limited (“SGORPL”) as part of a Consortium of Banks by way of Standby Letter of Credits Facilities (“SBLC”) which were to be discharged on various dated when invoked by the beneficiaries/discounting banks. These SLBC facilities were secured by securities and undertakings provided by the Sterling Oil as holding company of SGORPL.
The SBLCs were discounted through Sterling Exploration & Energy Production Company Limited, BVI (“Sterling BVI”) but it failed to meet its periodical debt obligations to Foreign Currency Lenders. The Foreign Currency Lenders invoked the SBLCs and the SBLC Lenders honoured their obligation under the said SBLC. A demand was raised upon SGORPL to immediately reimburse the amounts paid by the Financial Creditor to the Foreign Currency Lenders. However, SGORPL defaulted in repaying the demanded amount and its account was declared as a Non-Performing Asset on 19.06.2019. Due to failure in repaying of the outstanding amount by SGORPL and Sterling Oil even after repeated assurances, a Recall Notice dated 22.10.2019 was issued to repay the outstanding amount.
It was contended by Sterling Oil that the Promoters entered into a One Time Settlement of Rs. 6457 crores (Rs. 3826 crores towards the Group’s Indian Companies and Rs. 2631 crores towards the Group’s Foreign Companies) with the banks. However, the One Time Settlement for the Indian Companies was scuttled even though the Promotes had already Rs. 614 crores towards the OTS amount.
The Tribunal observed that the DRT had issued a decree dated 31.01.2022 for a sum of 1217.60 crores in favour of the Financial Creditor. This amount had not been paid even though some amount had been paid under the One Time Settlement. Since there was a default in the payment of a Financial Debt, the Application was admitted.
Case: State Bank of India vs Sterling Oil Resources Limited
Case No. CP (IB) No.596/MB-IV/2022
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