The State-owned Indian Oil Corporation (IOC) has acquired Mercator Petroleum Limited (MPL) through an insolvency proceeding. The acquisition, valued at approximately Rs 148 crore, was approved by the National Company Law Tribunal (NCLT) under the relevant provisions of the Insolvency and Bankruptcy Code, 2016.
The Acquisition and Resolution Plan
The acquisition of MPL strengthens Indian Oil presence in the oil and gas exploration sector. MPL holds an onland oil and gas exploration block in the Cambay Basin, Gujarat with significant potential for oil discovery, estimated at 45.5 million barrels of inplace reserves. In November 2019, IOC had already signed a contract to purchase oil from MPL, making this acquisition a logical step in further cementing their collaboration.
Resolution Plan and Payment Structure
Under the resolution plan submitted by IOC, the company will pay Rs 135 crore to secured financial creditors who had admitted claims totaling Rs 291 crore. However, no payment has been designated for unsecured financial creditors, who had admitted claims of Rs 118 crore.
Additionally, the resolution plan offers Rs 5.40 crore to operational creditors, which includes vendors, workmen, employees, and statutory dues, against their total admitted claims of Rs 73 crore. IOC has also agreed to bear the insolvency proceeding cost of Rs 8.7 crore, demonstrating its commitment to ensuring a smooth transition of MPL.
Background of the Insolvency Proceeding
The insolvency proceeding of MPL was initiated by Cayman Island-based oil services company Halliburton Offshore Services Inc. in August 2021. This action came after Mercator defaulted on a payment of Rs 2.87 crore, which eventually led to the company being brought under the insolvency process.
Committee of Creditors Approval
The resolution plan proposed by IOC received a unanimous 100 percent vote of approval from the committee of creditors. Following this approval, the plan moved forward to the National Company Law Tribunal, which subsequently granted its consent for the acquisition.
GAIL’s Acquisition of JBF Petrochemicals in an Insolvency Battle
Earlier in the year, GAIL (Gas Authority of India Limited) acquired JBF Petrochemicals, a private-sector chemical company, for Rs 2,079 crore. This strategic move allowed GAIL to expand its presence in the petrochemical business.
In this case, GAIL outbid a consortium of IOC and Oil and Natural Gas Corporation (ONGC) in an insolvency process managed by IDBI Bank. The acquisition helped recover Rs 5,628 crore of dues to financial and operational creditors.