Author: Ritu Singh

Lenders reject Lakshadweep’s offer to buy Jaypee Infratech

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Around 85% of lenders on Wednesday rejected Lakshadweep Pvt Ltd’s Rs 7,350 crore resolution plan to buy Jaypee Infratech, a subsidiary of Jaypee groups flagship firm Jaiprakash Associates.

Lakshdeep Global Pvt Ltd, is a joint venture (JV) between Sudhir Valia-led Suraksha Asset Reconstruction Company and Mumbai-based Dosti Reality.

Now, the Allahabad bench of National Company Law Tribunal (NCLT) will refer the case to Supreme Court or will go for the company’s liquidation. The liquidation value of the company is between Rs 12,000-14,000 crore.

Read also: Voting on Lakshdweep’s resolution plan for JP Infratech to conclude today

Lakshadweep Pvt Ltd was identified as H1 by Committee of Creditors (CoC) over other bidders like Kotak-Cube JV, Adani Group and JSW Group.

Jaypee Infratech is facing insolvency proceedings after it defaulted on loan repayments.

The NCLT had last year admitted the application by an IDBI Bank-led consortium seeking resolution for Jaypee Infratech under the Insolvency and Bankruptcy Code.

The JV has offered Rs 1,200 crore in cash to the banks, Rs 4,000 crore worth land parcel and the rest in form of long-term non-convertible debentures in the insolvency auction. A small equity stake to lenders is also part of the offer.

Jaypee Infratech currently has about Rs 24,000 crore worth assets while its debt is nearly Rs 10,000 crore.

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Essar Steel CoC gives nod for bids from NuMetal, ArcelorMittal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Essar Steel’s Committee of Creditors cleared a resolution to allow bids from NuMetal and ArcelorMittal, sources familiar with the matter said.

The lenders of the steel-maker will allow ArcelorMittal and NuMetal to clear their dues, and both companies were issued notices by the creditors’ committee to obtain a “no dues” certificate from banks within seven days.

The development comes after ArcelorMittal and NuMetal met Essar Steel’s creditor’s Committee last week to explain the details of their offers.

The NuMetal consortium with Ruia was asked to clear dues worth nearly Rs 1 lakh crore for Essar Group companies, while ArcelorMittal has to clear dues worth nearly Rs 7000 crores of Uttam Galva Steels and KSS Petron.

While ArcelorMittal said it would clear its dues, NuMetal said it was not liable to clear all its dues.

The National Company Law Appellate Tribunal is set to hear pleas of NuMetal and ArcelorMittal on May 17 on NCLT Ahmedabad’s order.

The Ahmedabad bench of the National Company Law Tribunal (NCLT) had said that the invitation of second round of bids was invalid as the Resolution Professional had not followed due procedure.

The Tribunal had sent the Essar Steel matter back to the Committee of Creditors and Resolution Professional (RP).

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Monnet Ispat next in line for insolvency proceedings; AION Capital-JSW resolution plan cleared

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Debt-ridden steel company, Monnet Ispat, is likely to be the next in line to undergo insolvency proceedings as AION Capital-JSW resolution plan was cleared on April 10, sources said.

The National Company Law Tribunal (NCLT), which was supposed to take up the AION Capital-JSW resolution plan today has deferred its decision on the plan for tomorrow.

Now, with Kotak Mahindra Counsel’s consent, AION Captial-JSW resolution plan has 99% CoC approval. Around 98% of the lenders had already voted in favour of AION Capital-JSW resolution plan as the offer includes a payment of more than Rs 2,750 crore to the lenders, the sources said.

The AION Capital-JSW offer also includes an equity infusion of Rs 1,050 crore.  According to the proposal, the banks will take around 72% of the haircut.

The firm has a debt of over Rs 10,000 crore to banks, led by the State Bank of India (SBI). Founder Sandeep Jajodia currently owns 25% in Monnet Ispan and the lenders own 49% stake in the company.

In June 2017, the Reserve Bank of India identified 12 accounts having more than Rs 5,000 crore of outstanding loans. The accounts amounted to 25% of the total non- performing assets of banks for immediate referral for resolution.

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Essar Steel CoC to meet today, JSW likely to go solo for bid

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Debt-ridden Essar Steel’s Committee of Creditors is all set to meet today after the NCLT directed the Resolution Professional and lenders to reconsider the decision taken in the first bidding round.

JSW Steel has written to the committee asking them to allow the company to bid for Essar Steel without NuMetal, sources told CNBC-TV18.

Seshagiri Rao, joint managing director and chief financial officer, JSW Steel said the new proposal will allow the firm to bid directly for Essar Steel, an option that was not present earlier as CoC had only allowed shortlisted firms to take part in the bidding process. This in turn had prompted JSW to partner with NuMetal to become part of the bidding process.

The creditors are also likely to consider bids from ArcelorMittal and NuMetal submitted in the first round.

The committee is considering to invite re-bids before the new CIRP (Corporate Insolvency Resolution Process) deadline, which is at the end of May.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Strike one, 11 more to go

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In June 2017, the Reserve Bank of India (RBI) identified 12 of the country’s biggest loan defaulters and directed banks to send these cases, comprising about 25% of the total bad loans, packing to the National Company Law Tribunal (NCLT) for resolution.

The RBI wants banks to initiate resolution of the unpaid loans by taking these cases to the insolvency court. The first of those 12 cases has just reached a successful resolution – NCLT approved Vedanta’s acquisition of Electrosteel Steel – under the Insolvency and Bankruptcy Code (IBC). But time is fast running out for the rest.

For four of the twelve cases, the 270-day deadline has passed, and for another five, it will end this month. Five other cases – Bhushan Steel Limited, Bhushan Power & Steel, Monnet Ispat, Jyoti Structures, and Amtek Auto – have passed the creditors committee approval stage, but are pending before the NCLT.

Alok Industries is now facing liquidation because the resolution plan proposed by Reliance Industries and JM Financial ARC consortium could not muster the 75% votes required to pass resolutions under IBC. For now, the insolvency authorities have sought a stay on liquidation proceedings.

When the IBC was enacted more than a year ago, it was billed as one of the most significant reforms in recent times, a magic wand for resolutions. A year later, the law is still evolving, has teething troubles and requires several changes. What it has done is change the equation between creditors and borrowers for good, and enforced a time-bound process on all stakeholders.

The closure of the first list of defaulters assumes significance in this backdrop. The haircut, or the debt that lenders have to forgo for these cases is estimated at 17-86%. Stakeholders will take a hit, no doubt. But resolving the first list will tantamount to resolving a quarter of the banking industry’s stressed assets problem – which in itself is no small feat.

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Alok Industries’ resolution plan rejected by lenders, company may head for liquidation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Textile maker Alok Industries may be facing liquidation as the resolution plan submitted for the company by Reliance Industries-JM Financial ARC consortium, failed to get the requisite votes from the lenders.

Reliance Industries-JM Financial ARC was the sole bidder for the company in the second round of bidding conducted by the resolution professional under the IBC process.

The Committee of Creditors(CoC) concluded its voting in the Alok Industries resolution case this morning.

Sources said the offer from RIL-JM failed to meet the 75% voting mark from the lenders. Only 70% of the CoC voted in favour of the bid, while 30% rejected it, and hence the resolution plan stood rejected.

According to IBC norms, a resolution plan is accepted if a minimum of 75% of lenders vote in favour of the plan.

Sources say RIL had offered an all-cash deal of approximately Rs 4800 crore for Alok Industries. Some lenders favoured liquidation as the bid value was very close to the liquidation value of Rs 4200 crore, which they felt could be recovered easily.

“As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis.

We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges,” said Reliance Industries.

In the earlier round of bidding, no bids were accepted as the sole bidder at the time- JM Financial ARC- did not make proper disclosures about its bid.

“In the ordinary course of business, JM Financial ARC does submit resolution plan, from time to time, based on the opportunities available to it. Accordingly, JM Financial ARC had submitted a resolution plan jointly with Reliance Industries Limited for resolution of debt of Alok Industries Limited under the provisions of the Insolvency & Bankruptcy Code, 2016,” said JM Financial in a statement.

The 270-day deadline for resolution of Alok Ind under IBC is set to expire on April 14. With RIL-JM Fin ARC’s resolution plan being rejected, the company with claims of over Rs 29,400 crore will likely head into liquidation. State Bank of India has the largest exposure to Alok Ind among financial creditors.

Network18, the parent company of CNBC-TV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Race for Monnet Ispat: Committee of Creditors clears resolution plan by Aion-JSW

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Committee of Creditors (CoC) has cleared the resolution plan for Monnet Ispat by Aion-JSW.

Aion-JSW was identified as the only bidder for Monnet Ispat and was identified as H1 for Monnet Ispat.

Banking sources say over 97% of the lenders voted in favour of Aion-JSW proposal and offer includes payment of over Rs 2,750 crore to lenders and equity infusion of Rs 1,050 crore.

This works out to 72% haircut that banks will have to take on the Rs 10,000 crore debt. Banks are led by State Bank of India and IDBI Bank.

The resolution professional (RP) and CoC will submit the approved resolution plant to National Company Law Tribunal (NCLT) for final nod.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow