 Hello and welcome to NewsClick. Today we talk about a company called Sterling Biotic. This is a Gujarat based company, in fact based in Vadodara. And it is among various famous companies or promoters like Vijay Malia, Nirav Modi, Mehul Choksi, whose promoters are absconding from the country. This is a family called the Sandeshiras and all four key members are absconding. Now, why is this in the news? Because, astoundingly, a proposal was made. First of all, let me explain how this works. When a company is bankrupt or the promoters are absconding, then the bank moves a proposal under the Bankruptcy Act, which is called the Insolvency and Bankruptcy Act, to find another buyer. So here the lead bank was Andhra Bank. Andhra Bank moved a proposal along with the Committee of Creditors, which is other banks to whom this company owes money. They form a committee called the Committee of Creditors or COC. So I will refer to it as COC. And they move before the National Company Law Tribunal. So this case was before the Bombay Tribunal. Now, what happens over here is this company alone owes about 8100 crore. At least that's what we know. It may be a little more, but it owns, owes that much of money to banks. The promoters have run away. So the banks have approached the NCLT. After they have approached the NCLT, one finally they come to the court on 11th of March and they say, we want to withdraw this proposal. Why do they want to withdraw it? Because the company apparently has offered to pay just 45% of what it owes them in what is called a one-time settlement. And the banks are willing to accept it. Now none of this scandalous deal is told to the NCLT at all. Nothing has been disclosed. So first the good news. In what is restoring our faith and judiciary, the NCLT refused to accept this. It in fact has served a notice to the bank as well as to other regulators. Now why did it have to do this? Because I think we should go into the background of this company a little bit. This company is being investigated for fraud by the Central Bureau of Investigation. When the two former heads of the CBI were scobbling and filing cases against each other, one of the prominent cases that was involved was sterling biotech. And the promoters have been spending money like water. They are close to Bollywood stars. They have a 40,000 square foot mansion in Vadodara. They have a 100 crore Gulfstream jet. This is the kind of lifestyle they have been needing. And the enforcement directorate is investigating them because they have fled the country. There is a deli court order asking for them to be extradited and brought back to India. The serious frauds investigation office which works under the Ministry of Corporate Affairs is investigating them. So here is a company where promoters are scondig and it is being investigated by every top agency in this country. They make an offer to say we will pay you 45% of the loans. Imagine if that happens with the home loan that you owe. You probably owe 1 lakh rupees to the bank. Can you get away by saying I will pay you 45,000? But Andhra Bank apparently was willing to accept it. And look at the arrogance and the temerity with which they do this. They approach the national company law tribunal. The system is that when you approach a bankruptcy court, you appoint what is called a resolution professional. So there was a resolution professional in this case. The banks do not tell him why they want to withdraw the proposal from the bankruptcy court. All they say is go to the court. If the NCLT asks questions, then we ourselves will give replies directly to you. We are not giving you any information. The NCLT correctly found this highly suspicious. So it has refused to accept it. It has posted it for 26th March. So we need to wait and see what happens that day. And it has done something brilliant. It has sent notices to the Reserve Bank of India, to the SEBI Chairman, to the CBI, to the Enforcement Directorate, as well as the Serious Fraud Office through the Ministry of Corporate Affairs. Now we need to see whether any of these wake up and represent themselves on the 26th. But while that is happening, the next day there are media leaks all over the place where this information about accepting a one-time settlement at 45% which is 5,500 crore, is leaked to all the newspapers. The stock exchanges are again, blindly told there is a one-time settlement that they are willing to accept. So my question is, if a company that is as fraudulent and scandalous is allowed to get away with this, then what kind of bankruptcy proceedings are we conducting in the country? Do you know that the NCLT also noticed something interesting? The promoters are absconding. So who makes the proposal? There is a third person. Apparently his name is Mr. Farad Darwala. He signs, not on behalf of Sterling Biotech, but on behalf of the Sandeshwara Group. Imagine going to court with an application which is meant for a group not even willing to say that Sterling Biotech is making this proposal. Obviously the NCLT refused to accept that as well. And it seems to be that the judges are quite furious. Now let me narrate the background. I've already told you as being investigator. So who are the promoters? The promoters are Nitin Sandeshwara, Chetan Kumar Sandiresa, Dipti Chetan Sandeshwara and Hitesh Kumar Patel. These are all absconding and they are being extradited. That's not all. There are four others that are under investigation. So the CBI is investigating some Rajapushan Om Prakash Dixit, a Vilas Joshi and a chartered accountant called Hemant Hathi. In addition, there is an Andhra Bank director called Anup Garg who is also being investigated by the CBI. Same Andhra Bank, mind you, which now wants to do a quick one-type settlement and withdraw the proposal. Now the withdrawal application says that 90.32% of bankers have accepted this, willing to accept 45%. What does that say about Indian banks? You want to bet that all these bankers are public sector banks and nationalised banks who are running losses and year after year it is our money through the Exchequer that has been going to recapitalise these banks because they have been building up bad loans like it is somebody's party. They are gifting money to promoters. Promoters are spending it on a lavish lifestyle and the banks not only haven't cared for recovery in the past, which is why we have a humongous 12 lakh crore of bad loan spending. We are wiping out, the banks are wiping out these loans, writing them off at the rate of 2 lakh crore rupees every year. Where does this money come from? It comes from you and me because when the government through the finance ministry puts money into banks to recapitalise them, that's our money. Where are the banks recovering money from for their survival? Again, we the people. So all the banking services that ought to be free for us, which is whether you are getting a checkbook, whether you are withdrawing more than three times, whether you want a bank statement, everything is charged. You are being charged all kinds of rates on your borrowings if you have a home loan and consumer borrowings and home loans are what is keeping banks going. So we are financing the banks. Well, banks are involved in a loot giving away this money to completely dubious, candleless, industrialist like Sterling biotech and after we have an insolvency and bankruptcy act, nothing has changed. So the government tells us things are different now. We've got the bankruptcy act, no more phone banking. So if there is no phone banking, how on earth does an Andhra Bank and the committee of bankers have the temerity and the gumption to make an offer like this? You're not even wanting those industrialists back here. In fact, look at what will happen while, you know, we are still chasing Vijay Malia while people are discovering Nirav Modi in London. What could happen in this case is a 45% payment of 5,500 crore will come from nowhere. No one is asking what is the source of this money and these people can fly back in their 100 crore private jet and go back to business as usual because nothing has been done in the past five years to increase accountability of bank chairman and managing directors. What this means and what has happened, I'm not saying anything that hasn't happened in the last 30 years repeatedly, which is that a few months from now the media forgets about it. We forget about sterling biotech. Smart companies or other dubious ones usually also take another additional precaution. They change their name. So nobody makes connection between the old one and the new one. Back to business as usual. They're getting fresh loans. They may announce diversifications. They may come back to raise money and nobody knows and the cycle continues. Who pays for it? We pay for it. Now my point is in sterling biotech it doesn't stop over here. It has implications for the entire bankruptcy code. This code finally showed some signs of working not because all did three things. One is that some companies were scared about the implications so they came back to pay on their own who were willful defaulters, the smaller ones. The large companies and the government has to be complimented here have been shown that there will be no mercy and their companies will be sold. So one company of Bhushan Steel has been sold. A couple of them Steel ones have recovered tens of thousands of crores. So SR Steel was the biggest of willful defaulters which is still in the pipeline. We know that Arselord Mittal has made a 42,000 crore bid. In fact to qualify for that bid the bankers have been so stringent they said pay back your bad loans in other companies like Uttam Galva. This man has paid 8,000 crores just to qualify to bid for SR Steel. 8,000 crore is the entire outstanding of sterling biotech but where that company is concerned bankers are merely willing to accept a one-time settlement again from a completely fraudulent company. Isn't this a national scandal? And then SR is obviously fighting it out they don't want to lose their company so they're back in the epilogue tribunal having lost a couple of times before and they have come up with another magic offer like sterling biotech saying we will refund 53,000 crore to everybody secured creditors, operational creditors anybody that we owe money to. So here's a group which has not paid any money until has got repeated bailouts and has been declared the top willful defaulter in the country. Suddenly it announces after the court has ruled that Arsenal or Mithil will get their company they say we're going to pay everybody. Now the question is if you accept this dubious offer from sterling biotech how on earth can you refuse an offer from SR's group for SR Steel and if you're not going to question the color of money for sterling biotech where on earth are they getting 5,500 crore and if they had that money why on earth did they run away why are they absconding. So if you don't question the color of their money maybe because they're from Kuchrat can you question the color of SR's money and once you have two big deals going down the tube like that then the court is as good as over because it means we are back to influence peddling we are back to business as usual we are back to banks running a bad debt so here's a government which kept telling us that you know we are writing off loans because it's a tax adjustment but we are going to go after them and recover is this a sign of that recovery I mean why isn't there action why has the RBI summoned Andhra Bank and begun to question them they are all our regulators are silent we don't even know what's going to happen on the 26 so we're going to watch I think that day is going to make a difference it tell us does the bankruptcy code have any meaning at all or will we again have some of our faith restored in our institutions and they'll take a strong stand that day so we will be watching and I'll come back to you with more thank you