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National Company Law Tribunal Orders Mediation Between B9 Beverages and Creditors in Insolvency Case
The has directed , the company behind the popular Bira 91 beer brand, along with its promoters and certain , to participate in a mediation meeting aimed at exploring a possible settlement of the . The order was passed on a filed by against the beer maker, reflecting the tribunal’s push for an before admitting the case.
The , comprising Judicial Member Ashok Kumar Bhardwaj and Technical Member Ravindra Chaturvedi, issued the directive on , after noting that the matter had remained pending for over ten months awaiting consideration for admission. The tribunal’s intervention comes at a critical juncture for B9 Beverages, which is grappling with a debt of approximately ₹19.04 crore, against which a settlement offer of only ₹3 crore has been made—a figure that drew sharp criticism from the petitioning bank.
Mediation Ordered Amidst Creditor Opposition
During the hearing, counsel for B9 Beverages submitted that he was representing willing to infuse funds into the company and revive it. He informed the bench that settlement discussions were underway with the applicants in the various connected . However, the proposal was met with skepticism from most creditors. questioned the seriousness of the ₹3 crore settlement offer, arguing that it was far below the outstanding debt. Other applicants expressed concern that the settlement proposal was merely a tactic by B9 Beverages to buy time and potentially siphon off its assets.
, on the other hand, informed the tribunal that it had received a settlement offer and was considering it. This mixed response from the creditor community highlighted the delicate balance the NCLT had to strike between giving the a chance to revive and protecting the interests of the creditors.
Concerns Over Asset Siphoning and Tribunal’s Observations
The tribunal took note of a shareholding chart produced by B9 Beverages’ counsel, but observed that it could not see how the chart was relevant at that stage. In a pointed remark, the bench stated that the chart could be perceived only as an attempt to mislead the tribunal on the issue. This observation underscored the tribunal’s vigilance against any procedural manipulation.
Amid the apprehension expressed by some creditors that assets could be siphoned off during the mediation process, the NCLT directed that no assets of B9 Beverages be parted with. It further ordered the counsel for the financiers seeking to revive the company to carry an inventory of all the company’s assets and provide copies to the creditors’ counsel. This protective measure was intended to ensure transparency and prevent any while the mediation was underway.
Legal Implications and Analysis
The NCLT’s decision to direct mediation under is noteworthy. While Section 12A allows for the withdrawal of an insolvency application if a settlement is reached with the majority of creditors, the tribunal here chose to facilitate mediation even before admission. This approach aligns with the legislative intent of promoting resolution over , but it also raises questions about the timing and efficacy of such .
Legal experts note that the NCLT’s order to maintain the regarding assets is consistent with the principles of preserving the ’s value during the resolution process. The direction to provide an asset inventory serves as a safeguard against , a common concern in insolvency cases where the debtor may attempt to dissipate assets before a is appointed.
The tribunal’s warning that no further indulgence would be granted if the mediation fails to result in a settlement signals a strict timeline. The matter was listed for , just a day after the scheduled mediation meeting, indicating that the NCLT expects expeditious progress. This tight timeframe puts pressure on all parties to reach a consensus quickly or face the formal admission of the insolvency petition.
Impact on Insolvency Practice
This case illustrates the growing trend of courts and tribunals encouraging mediation and in insolvency matters. For corporate debtors, the mediation route offers an opportunity to avoid the stigma and operational disruptions of formal . However, the skepticism shown by creditors like highlights the challenges of settling large debts with minimal offers.
For legal practitioners, the NCLT’s order serves as a reminder of the importance of presenting credible settlement proposals. A mere offer of ₹3 crore against a ₹19 crore debt is unlikely to pass muster unless supported by a concrete revival plan and commitment from willing to infuse funds. The tribunal’s rejection of the shareholding chart as potentially misleading also underscores the need for parties to present only relevant and accurate evidence.
From a broader perspective, the case reinforces the NCLT’s proactive role in case management. By directing mediation and imposing asset protection measures, the tribunal is balancing the competing interests of revival and creditor protection. The outcome of the mediation on will be closely watched by the insolvency bar, as it could set a precedent for how similar pre-admission settlements are handled.
Conclusion
The NCLT Delhi’s order to mediate between B9 Beverages and its creditors represents a strategic attempt to resolve the insolvency dispute without resorting to formal admission. While the path to settlement is fraught with challenges—particularly the wide gap between the debt and the offer—the tribunal’s structured approach, including asset protection and strict timelines, provides a framework for meaningful negotiation. Whether the mediation succeeds or fails, the case underscores the evolving dynamics of corporate insolvency resolution in India, where tribunals are increasingly willing to explore consensual solutions before triggering the full rigour of the .
