Stressed assets: RCom insolvency on hold; Essar Steel seeks clarity on bidder
Photo Credit: Reuters

As Indian banks grapple with stressed assets worth nearly $150 billion, various branches of the National Company Law Tribunal (NCLT) are monitoring hundreds of such cases.

In the fourth of a series of weekly round-ups on the insolvency cases, we review the status of the top ones that made news this week.

While Anil Ambani-led Reliance Communications reached a settlement with Swedish telecom firm Ericsson over outstanding dues, the National Company Law Appellate Tribunal (NCLAT) admitted petitions filed by Jaiprakash Associates and its lenders challenging an NCLT order.

The Mumbai and Kolkata benches of the NCLT, which are closed until Sunday for the summer holiday, are expected to resume some big insolvency hearings next week.

Essar Steel

Lenders to the beleaguered steelmaker earlier this week filed a petition with NCLT's Ahmedabad bench seeking clarification on whether ArcelorMittal’s bid for debt-laden Essar Steel Ltd was eligible, given that the Lakshmi Mittal-led company had offered to repay its dues for Uttam Galva Steels Ltd and KSS Petron.

In the middle of May, ArcelorMittal said it would transfer Rs 7,000 crore into an escrow account of the State Bank of India to clear overdue loans.

Earlier in the month, bidders Numetal Mauritius and ArcelorMittal had appealed at the NCLAT challenging an order by the NCLT that had disqualified them from bidding for Essar Steel.

Both Numetal and ArcelorMittal were expected to clear debts of defaulting companies in which they own a stake.

ArcelorMittal had submitted a resolution plan for Rs 32,000 crore for Essar Steel while Numetal’s increased bid in the second round stood at Rs 37,000 crore. The committee of creditors for Essar Steel are yet to decide between the two resolution plans.

Reliance Communications

The Anil Ambani-led firm this week reached a settlement agreement with Sweden’s Ericsson for payment of dues and also managed to get a stay on previous NCLT orders for initiation of insolvency proceedings.

On May 30, NCLAT stayed three orders passed by the NCLT Mumbai bench, which allowed initiation of insolvency proceedings against Reliance Communications Ltd and its subsidiaries Reliance Infratel Ltd and Reliance Telecom Ltd.

NCLAT also directed RCom to pay Ericsson Rs 550 crore of the Rs 1,155 crore Ericsson has claimed in dues.

Following the settlement, RCom said it expected to complete its asset sale to Reliance Jio Infocomm and Canada's Brookfield in the coming weeks.

Jaiprakash Associates

A petition by the flagship company of debt-laden Jaypee Group was on Thursday admitted at the NCLAT, in which it contested an NCLT, Allahabad order which had asked the realty firm to return about 750 acres of land to subsidiary Jaypee Infratech Ltd.

The petition questioned the jurisdiction of the NCLT bench.

Last week, lenders to Jaiprakash Associates including ICICI Bank and Axis Bank had also filed a similar appeal contesting the same NCLT order. The matter is up for hearing on July 13.

The Allahabad bench of the NCLT had earlier in May ruled that Jaiprakash Associates had fraudulently used subsidiary Jaypee Infratech’s land parcels of over 750 acres to take on loans from lenders.

The bench ordered release of the collateral that Jaiprakash Associates had used to secure loans from lenders including ICICI Bank and State Bank of India.

Jaypee Infratech has been undergoing bankruptcy resolution since August last year, but the lenders have rejected an offer they received from the highest bidder, Lakshadweep Pvt. Ltd, a joint venture of Suraksha Asset Reconstruction Company and Mumbai-based Dosti Realty.

Nagarjuna Oil

The committee of creditors to Nagarjuna Oil Corp Ltd has been unable to decide on a resolution plan within the stipulated 180 days. This has prompted the NCLT Chennai bench to give a 60-day extension for the corporate insolvency resolution following a petition from the resolution professional.

The company has so far received bids from Citaxx Energy, Haldia Petrochemicals, and Bharat Petroleum Corporation Ltd.

Under the Insolvency and Bankruptcy Code, the resolution process, which is to be managed by insolvency professionals, has to be completed within a 270-day window – 180 days of initial time followed by an additional 90 days, if required.

Adani Power

Adani Power Mundra, a subsidiary of Adani Power Ltd, is likely to move the NCLT for bankruptcy protection, online portal The Wire reported citing unnamed sources.

Adani Power owns the struggling 4,620 megawatt Mundra plant in Gujarat and has tried selling a majority stake to the Gujarat government in the past. The plant has debt of over Rs 22,000 crore, the report said.

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