Sterling Oil Resources, a company backed by Nitin Sandesara, a fugitive businessman and one of the leading wilful defaulters of the country, has had an insolvency application accepted by the Mumbai bench of the National Company Law Tribunal (NCLT).
The State Bank of India (SBI) lodged the insolvency petition against Sterling Oil Resources when the company failed to fulfill a payment obligation of Rs 1,651 crore. Sterling Oil had provided a guarantee for loans obtained by Sterling Global Oil Resources Private Limited, a group firm situated in Mauritius.
Sterling Global Oil Resources holds an interest in an Oil Prospecting License through Sterling Exploration and Energy Production Company Limited (SEEPCO) in Nigeria, which functions as a subsidiary at the asset level.
SBI was among the consortium members that offered Standby Letter of Credits (SBLC) to foreign currency lenders of Sterling Global Oil Resources. An SBLC agreement was established with the SBLC providers in June 2014. These SBLC facilities were backed by securities and guarantees provided by Sterling Oil Resources as the holding company of SGORPL.
In February 2016, one of Sterling Oil Resources' group companies, Sterling BVI, defaulted on its periodic debt obligations to foreign currency lenders. Consequently, the lenders invoked the SBLCs, and SBI, as the issuer of the standby letter of credit, had to make a payment of Rs 857 crore on behalf of Sterling Global Oil Resources.
Following this, in March 2016, SBI demanded immediate reimbursement from SGORPL for the amounts paid as the SBLC provider. Despite repeated reminders, SGORPL failed to make the payment.
In October 2019, the lender issued a recall notice to both SGORPL and Sterling Oil Resources. When the recall notice was ignored, SBI pursued legal action through the Debt Recovery Tribunal (DRT), which directed Sterling Oil Resources to promptly settle the outstanding payment. However, as Sterling Oil Resources still failed to comply, SBI resorted to filing an insolvency plea with the NCLT.
Nitin Sandesara, who along with members of his family has been declared a fugitive under the Fugitive Economic Offenders Act, is one of the top wilful defaulters in the country. His company Sterling Biotech owed Rs 1,158 crore to Indian banks. NCLT ordered liquidation of Sterling Biotech after the corporate insolvency resolution process failed to find any takers for the company. Sterling Biotech was acquired by US start-up Perfect Day Inc after paying Rs 638 crore to financial creditors.