IBC helps HBN’s retail depositors claim their dues

MUMBAI: The Insolvency and Bankruptcy Code (IBC), considered an exclusive redressal platform for institutional defaults, has yet again come to the rescue of retail depositors. A National Company Law Tribunal bench has admitted the request for proceedings against Delhi-based HBN Dairies & Allied, which failed to repay about Rupee1,200 crore to more than two lakh depositors.


This is one of the first few cases where depositors have approached the dedicated bankruptcy court to recover their dues.


A group of 40 investors came together to file an insolvency petition against the defaulting company, which will now either be revived with a new management or liquidated within the next 270 days to pay off debt. There are other small depositors from states such as Tamil Nadu, Maharasthra, Gujarat, and Andhra Pradesh.

MM Kumar, president, and SK Mohapatra, technical member at the NCLT principal bench, have admitted the company for insolvency proceedings. Rohit Sehgal will be the interim resolution professional.

HBN Dairies was incorporated in December 1998. The authorised share capital of the company is Rupee11 crore.

“IBC could well help resolve the depositors’ plight as they struggle to recover their dues,” said Rohit Sehgal. He will run the dairy-products company’s day-to-day activities during the corporate resolution proceedings.

“This is one of the few cases under IBC where depositors dragged the defaulting company to the court,” said Sehgal, a partner with AAA Insolvency Professionals.

“Although only 40 investors were applicants for getting the matter admitted by NCLT, with the CIRP kicking in, now the entire lot of depositors will be brought in with total default sum estimated to be as high as Rupee1,200 crore,” he said.

The company had invited applications from customers/investors under an investment scheme offering two categories of plans — lump-sum or installment repayment options. This scheme was held to be a ‘Collective Investment Scheme’ by the Securities Exchange Board of India (Sebi).

Earlier in July, Sebi ordered auctioning of six properties of HBN Dairies for a reserve price of Rupee154 crore. The move was part of the regulator’s effort to recover money raised by HBN Dairies through illegal collective investment schemes.

The NCLT move would now preempt the proposed auctions.