These are the four primary issues that have soured the relationship between SBI-led lenders and JKC and delayed the resumption of commercial flights by Jet Airways, once India's largest private airline, which went bankrupt in 2019. Over the past three years, the airline went through an insolvency process under which JKC's resolution plan was approved by a committee of creditors (lenders) and the National Company Law Tribunal (NCLT) in October 2020 and June 2021, respectively. But this didn't mean an end to the problems.
Apart from being the most successful cases under the IBC, Bhushan Steel and Essar Steel are among the best steel assets in the country. They also ended up helping their lenders get back a significant chunk of the money while allowing Tata Steel to consolidate its position and giving the world's two largest steel makers - ArcelorMittal and Nippon Steel - a strong foothold in India. A significant contrast was the pace at which these two cases were resolved under the bankruptcy code. In the annals of the Insolvency and Bankruptcy Code (IBC), Essar Steel may go down in history as the most noticeable resolution with the world's largest steelmaker, ArcelorMittal, and the incumbent, Ruia family, locked in an intense battle spanning more than two years and ultimately resulting in full recovery of the principal amount for the financial creditors.
The Insolvencies and Companies Court of London high court on Monday declared fugitive business baron Vijay Mallya a bankrupt person as per UK laws. Legal experts explain what this means for 65-year old Mallya's personal liberties, his legal battle against extradition to India to face trial, and for the consortium of Indian lenders - at whose behest the bankruptcy proceedings were initiated in the UK courts.
Experts say this further underlines the lack of investor interest in stressed assets at present.
US-based Oaktree on Monday pipped Piramal Enterprises and Adani Group to emerge as the highest bidder for DHFL after fresh bids were invited under the insolvency process, according to sources. The committee of creditors had fixed December 14 as the last for submission of revised bids. According to the sources, Oaktree raised the bid to Rs 36,646 crore, including Rs 1,000 crore for insurance and Rs 3,000 crore of interest earned, while Piramal Enterprises offered Rs 35,550 crore, including Rs 300 for insurance and Rs 3,000 of interest earned.
Bad loans, however, continued to rise in the micro, small and medium enterprises category
Currently, confiscation can be done through multiple laws, but it is a complicated process.
The Reserve Bank on Monday superseded the boards of Srei Infrastructure Finance as well as Srei Equipment Finance, citing concerns over governance and payment defaults, and decided to refer the two NBFCs for resolution under the insolvency law. This is only the second time in as many years that the Reserve Bank of India (RBI) is referring entities for the resolution process under the Insolvency and Bankruptcy Code (IBC) after taking first ever such step in the case of DHFL back in 2019. Superseding the boards of the crisis-hit Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), the RBI has appointed Rajneesh Sharma, former Chief General Manager of Bank of Baroda as the administrator to manage the affairs of the two companies.
A draft proposal by the sub-committee of the insolvency law committee has recommended that the corporate debtor (CD) may initiate the prepack since it may prove difficult to implement if creditors are allowed to do so without the willingness of the promoter.
When Jet Airways shut operations, the slots which were allocated to it were temporarily distributed among various airlines. And, the airlines that were called upon to immediately create infrastructure so that the public at large does not face any hardship have invested huge amounts of money to created infrastructure to utilise such slots. "In view of this, though the allocation of slots to such airlines is temporary the same can't be withdrawn from them without any legitimate basis.", the affidavit said.
Piramal Enterprises on Friday claimed that its bid for resolution of debt-ridden mortgage lender DHFL is highest and fully compliant with regulatory norms. Since the conclusion of the fifth and final round of the bidding process last month, Piramal Enterprises and the US-based Oaktree Capital are claiming that their bids are the highest and fully implementable. According to sources, suitors have submitted bids in the range of Rs 35,000-37,000 crore.
Wilful defaulters, responsible for non-performing assets for over a year, would be prohibited from taking over an insolvent company.
The opposition will seek to target the government on the issue of farmers' plight as well as their demand for a legal backing for minimum support price.
State-run lenders will take a lead in creation of the bad bank, but the sick asset resolution platform needs the support of private banks and other lenders to be successful, State Bank of India managing director Swaminathan J said on Thursday. If all lenders come on board, the National Asset Reconstruction Company (NARC) announced in the budget will be able to aggregate 100 per cent of a sick company's outstanding loans, which shall ultimately lead to better resolution of the asset quality stress for all. The government is yet to announce the specific contours of the NARC or the bad bank and has also only said that it is willing to provide some sovereign guarantee to help the platform.
The Delhi high court on Thursday put on hold the insolvency resolution process (IRP) proceedings against Reliance Communications (RCom) chairman Anil Ambani in relation to the recovery of Rs 1,200 crore loans given by SBI to his two firms. Ambani had given personal guarantees for the Rs 565 crore and Rs 635 crore SBI loans to RCom and Reliance Infratel Ltd (RITL), respectively, in August 2016.
Before the pandemic hit the world and led to shutdowns, the company had received nearly half a dozen offers. But bidders are now withdrawing. They want to reassess the situation. They want to conserve cash and avoid acquisition.
Noted banker Uday Kotak said the country's financial system is currently in a Darwinian mode as only the fittest lenders are able to survive. Kotak also said that historically, whenever there has been a problem with a private sector lender, it has been merged with a state-run bank.
The circular says even a day's delay in servicing loans would be now taken as a 'default'. And once in default, for loans above Rs 2,000 crore, the banks will have to arrive at a resolution within 180 days, else lenders will have to file an application under the IBC within 15 days.
The new Chief Economic Advisor Krishnamurthy Subramanian believes that more than unemployment, it is the quality of employment which needs to be focused on. In an interview with Arup Roychoudhury and Indivjal Dhasmana, Subramanian said that controlling inflation was the Modi government's biggest achievement.
Most banks led by the State Bank, have or are going to declare DHFL account as NPA in the third quarter.
The settlement offer has been made for 13 out of the 15 Videocon group companies that are currently under Corporate Insolvency Resolution Process.
With just a few days left for the suspension on fresh corporate insolvency cases to end, government sources have indicated that another extension is unlikely. An extension may not be economically desirable as it hampers the restructuring prospects for stressed companies, according to senior officials. Also, it would be a challenge to amend the law in such a short time. A Bill would have to be passed in both Houses of Parliament, if any change, with respect to suspension of Insolvency and Bankruptcy Code (IBC), is to be made - including extension or creating any exceptions to the rule.
The Delhi high court on Monday sought the Centre and SBI's reply to former RCom chairman Anil Ambani's plea to include the Chinese banks, which have got a decree of $717 million against him from a court in United Kingdom, in the proceedings related to recovery of Rs 1200 crore loan granted to two of his companies. The high court also said that the moratorium on recoveries from sale of Ambani's assets, as provided under section 96 of the Insolvency and Bankruptcy Code (IBC), would remain in operation for now. This direction came on the application moved by the State Bank of India (SBI) seeking a declaration that the moratorium shall continue to be in effect.
There are multiple laws dealing with insolvency in India, which lead to delays.
Jalan Kalrock Consortium, the winning bidder for the grounded Jet Airways, will make a total cash infusion of Rs 1,375 crore in the airline and lenders will take a steep haircut on their admitted claims of over Rs 7,800 crore under the approved resolution plan. The National Company Law Tribunal (NCLT) on June 22, approved the consortium's resolution plan for Jet Airways, which has been undergoing insolvency resolution process since June 2019. The carrier shuttered operations in April 2019.
India's goal of self-reliance has been paramount in the policy and practice of the country. The COVID-19 crisis gave us lessons on how to speed up efforts in that direction, he said.
The Reserve Bank had identified 12 accounts, each having more than Rs 5,000 crore of outstanding loans accounting for 25 per cent of total NPAs or bad loans of banks, for immediate referral for resolution under the bankruptcy law.
It will bear fruit in the next five years, which is why FDI is so strong. The foreigners clearly know what Indians don't, asserts T C A Srinivasa-Raghavan.
Prime Minister Narendra Modi on Thursday said his government is using all channels including diplomatic to bring back high-profile economic offenders, leaving them with no option but to return to the country. Speaking at a symposium on credit flow and economic growth, he asked banks to support wealth and job creators with proactive lending while promising to stand by any loans given in right earnest. "In our attempt to bring back fugitive (economic offenders), we relied on policies and law and also used diplomatic channels.
New-generation private sector banks such as ICICI, HDFC, Axis, Kotak etcetera owe their existence to the recommendations of the first Narasimham Committee.
India's debt recovery and restructuring framework is still a work in progress, even six months after the President's assent to the Insolvency and Bankruptcy Code 2016.
Seeking to provide a quicker and value-maximising outcome for stressed MSMEs, the government has introduced a pre-packaged resolution process for such enterprises by amending the insolvency law. Now, Micro, Small and Medium Enterprises (MSMEs) can seek resolution for their stress through the pre-packaged process under the Insolvency and Bankruptcy Code (IBC). An ordinance was promulgated to amend the IBC on April 4. Many MSMEs have been impacted by the coronavirus pandemic and experts opined that the latest amendment, which comes less than two weeks after the suspension of certain IBC provisions ended, is a welcome move.
So far, among the IBC cases, SBI has been able to recover Rs 8,500 crore from Tata Steel's acquisition of Bhushan Steel. Another Rs 1,500 crore is in an escrow account on account of Electrosteel Steels.
Home buyers would be able to invoke Section 7 of the IBC against errant developers.
Since the bankcuptcy law came into effect from December 2016, with every quarter, the recovery rate has progressively been going down, notes Tamal Bandyopadhyay.
After taking action against 226,000 shell companies last year, the ministry of corporate affairs has now zeroed in on a fresh batch of suspected shell companies.
The Bill when enacted will pave the way for setting up of the Resolution Corporation
Not just mid- and small-sized firms, even big ones will either sell group companies or stakes in their listed entities to tide over crisis; more sell-offs seen in coming months.
Seeking ArcelorMittal be declared ineligible to bid for Essar Steel, the petition cited Section 29A of the Insolvency and Bankruptcy Code which bars promoters of defaulting companies from bidding for stressed assets.
Even existing cases might come under the proposed law, including those of Vijay Mallya, Nirav Modi and Mehul Choski. But, the law would not cover earlier cases.
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