Lenders to miss March-end deadline to resolve key insolvency cases
Mumbai, March 12, 2023
Once an account is settled with the highest bidder paying their bid amount, then it frees part of bank's locked fund in an account which could be used for lending purposes
Indian lenders are set to miss March-end deadline to resolve several key bankruptcy accounts including Reliance Capital and Videocon Industries resulting in blockage of funds worth over Rs 1 trillion.
The banks were targeting to conclude the entire process by March-end so that they can resolve these accounts. Other unresolved accounts include Future Retail, Lanco Amarkantak, Reliance Broadcast, and Srei Infrastructure Finance. "Even though the higher bidder in some of the cases has been identified, it would be difficult to close the case in March due to litigation," said a banker. Once an account is settled with the highest bidder paying their bid amount, then it frees part of bank's locked fund in an account which could be used for lending purposes.
Lenders said in Videocon Industries account, their claims worth Rs 63,000 crore is pending resolution with Twin Star Holding, a promoter entity of Vedanta group, making the highest bid of Rs 3,000 crore. The case is pending in the Supreme Court after Twin Star appealed against a National Company Law Appellate Tribunal staying it's offer. The matter is pending in Supreme Court since January 2022.
In Reliance Capital account, lenders are awaiting fate of an appeal filed by Torrent group against a NCLAT order which ordered a second auction. Torrent emerged as the highest bidder in first auction with an offer of Rs 8,640 crore. The company was sent for debt resolution under IBC in November 2021 after it defaulted on loans worth Rs 24,000 crore. Lenders are also seeking to sell land assets of Reliance Communications in Navi Mumbai after their efforts to auction the company was marred by litigation. Lenders had referred the company to bankruptcy court after it defaulted to loans worth Rs 45,000 crore.
Similarly, lenders with exposure of Rs 25,000 crore in Future group companies have started the bankruptcy process against Future Retail and Future Enterprises and planning to complete the process by September this year.
In the case of electricity generator, Lanco Amarkantak, government owned PFC and REC, SJVN and DVC have made an offer of Rs 3,000 crore outbidding Reliance and Adani groups.
Among the resolved cases, the NCLT cleared acquisition of Jaypee Infratech by Mumbai based Suraksha group thus resolving dues of over Rs 23,000 crore. Two long pending accounts --Lavasa Corporation and Reliance Naval Defence was also resolved but with very low recovery for the banks.
Work in Progress
[The Business Standard]