As Indian banks grapple with nearly $150 billion in bad loans, various branches of the National Company Law Tribunal (NCLT) have admitted about 730 bankruptcy cases since the Insolvency and Bankruptcy Code (IBC) came into effect two years ago.
In the seventh of a series of weekly round-ups on insolvency cases, we check the status of the top cases that made news this week.
While the Mumbai bench of the NCLT reserved its order in the insolvency case of Jyoti Structures, bankrupt textiles firm Alok Industries received a breather as a committee of creditors approved an offer submitted by Reliance Industries and JM Financial Asset Reconstruction Co Ltd.
The NCLT’s Kolkata bench granted Adhunik Metaliks an extra 20 days to wrap up its bankruptcy proceedings and Lanco Infratech will get another hearing by the court in the first week of July.
This week, the NCLT’s Mumbai bench reserved its order in the bankruptcy resolution process of construction firm Jyoti Structures Ltd on the plan placed before the resolution professional. It also reserved its order on a petition filed by secured financial creditor DBS Bank, which has sought for a rejection of the resolution plan.
The engineering, procurement and construction firm had received a lone bid from a consortium of high net-worth individual investors led by Sharad Sanghi, chief executive officer at Netmagic Solutions. DBS Bank previously challenged the proposed resolution plan for Jyoti Structures alleging that the voting was not conducted in a fair manner.
Jyoti Structures owes the lender over Rs 8,000 crore. It is one of the 12 large cases referred by the Reserve Bank of India for insolvency proceedings.
Reliance Industries Ltd on Friday said that 72.19% of the voting share of the committee of creditors (CoC) for bankrupt textiles firm Alok Industries Ltd has approved the joint resolution plan it had submitted along with JM Financial Asset Reconstruction Co Ltd.
The favourable voting brings fresh hope to employees and operational creditors of Alok Industries, which was otherwise set to enter liquidation.
Last week, the NCLT’s Ahmedabad bench had asked the CoC of Alok Industries to re-evaluate the previously rejected bid submitted by the consortium of Reliance Industries and JM Financial ARC.
On 12 April, Reliance Industries said it had submitted a joint bid, along with JM Financial ARC, for the debt-laden Alok Industries. The two had offered to pay Rs 5,000 crore against the company’s total recoverable debt of about Rs 30,000 crore. But the plan was rejected by the committee of creditors as 30% of the votes were against it, and 70% for the bid. The minimum vote needed in favour of the resolution was 75%.
However, a recent ordinance of the Insolvency and Bankruptcy Code (IBC) has amended the threshold to 66% from 75% earlier in order for the CoC to approve a resolution plan.
This week, the NCLT’s Kolkata bench has granted steel manufacturing company Adhunik Metaliks an additional 20 days to conclude its bankruptcy resolution.
Under the Insolvency and Bankruptcy Code (IBC), a resolution plan has to be approved within a 270-day window – 180 days of initial time followed by an additional 90 days, if required. The deadline for the resolution process ended on April 29. However, the company’s resolution professional had sought an extension by excluding 20 days from the timeline of the process. The bench had earlier this month reserved its order in the case.
Adhunik Metaliks had also sought clarification on the eligibility of UK’s Liberty House as a bidder. According to unconfirmed reports, the lenders are seeking a higher bid from the metals group.
The next hearing in the case is scheduled for July 2.
The NCLT’s Hyderabad bench will be hearing the Lanco Infratech case on July 6. The 270-day deadline for the resolution process for the company had ended on May 4, and the company could be liquidated if an extension is not granted for insolvency proceedings or if no resolution plan is arrived at by then.
The lenders of Lanco had earlier rejected a resolution plan by infrastructure firm Thriveni Earth Movers.