Stressed assets this week: Tatas win race for Bhushan Energy; Jaypee Infra in focus
Photo Credit: Reuters

The total number of cases that have ended with the order of liquidation stand at 378 as on 31 March, according to data by the Insolvency and Bankruptcy Board of India (IBBI).

The board is also stepping up efforts by introducing a discussion paper on various issues that have been brought up by stakeholders relating to the liquidation process.

In this weekly series on developments in the stressed assets sector, the top cases include Tata Steel bagging Bhushan Energy, NBCC’s revised bid for Jaypee Infratech, and Calyx Pharma being sold at near-liquidation value.

Additionally, Punjab National Bank upped its target for recovery and resolution of bad loans.

Bhushan Energy

Tata Steel Ltd has won the race to acquire another insolvent company, with the National Company Law Tribunal (NCLT) approving the alloy maker’s Rs 805 crore ($115.4 million) bid to take over Bhushan Energy Ltd.  

Its liquidation value was seen at Rs 755 crore.

Delhi-based Bhushan Energy will be Tata Steel’s second acquisition of a distressed asset from Neeraj Singal and his family. The Tata group company had bought Bhushan Steel Ltd (now Tata Steel BSL Ltd) in May last year for Rs 35,200 crore through the Insolvency and Bankruptcy Code (IBC) route.

Bhushan Energy was a subsidiary of Bhushan Steel and was incorporated in 2005. It is based in Dhenkanal, Odisha.

Under the resolution plan for Bhushan Energy’s acquisition, Tata Steel will make an upfront payment of Rs 730 crore. It will also pay Rs 50 crore to operational creditors, a banker said, confirming the development. Tata Steel will also infuse Rs 367 crore into the company as equity capital.

Bhushan Energy has a debt of around Rs 4,000 crore. It was admitted to the insolvency court on January 8 last year on a petition filed by State Bank of India.

Jaypee Infratech

Lenders to insolvent realty developer Jaypee Infratech have put on vote the revised offer from NBCC (India) Ltd, formerly National Buildings Construction Corporation Ltd, till June 10.

As part of the revised offer, NBCC has offered to transfer Jaypee Infratech’s unsold residential inventory to lenders at Rs 1,300 crore as against the earlier offer of Rs 1,700 crore, one person in the know told The Economic Times.

“We have asked NBCC to further revise the bid as it has not made any relevant changes to the previous offer. It has conditions on the payments which are dependent on tax-related benefits,” a senior banker in the know told VCCircle.

Mid-May, the National Company Law Appellate Tribunal (NCLAT) had annulled voting by Jaypee Infratech's Committee of Creditors (CoC) on state-owned NBCC's bid to acquire the debt-laden developer.

NBCC had also sought to get the Yamuna Expressway project, for which financial creditors had suggested obtaining approvals for land transferability from Yamuna Expressway Industrial Development Authority.

Additionally, the CoC may also consider the late and unsolicited bid by the Adani group, which has offered an upfront payment of Rs 500 crore.

Jaypee Infratech owes a debt of Rs 8,000 crore to 13 banks led by IDBI Bank.

Calyx Chemicals

The State Bank of India (SBI) and other creditors to Calyx Chemicals & Pharmaceuticals Ltd will get less than 5% of their loans back after a bankruptcy tribunal allowed a consortium to take over the bankrupt drugmaker.

The NCLT has approved a bankruptcy resolution proposal for Calyx, which has a debt of Rs 1,679 crore, from Navi Mumbai-based consortium consisting of Topnotch Chemicals Pvt. Ltd and Khilari Infrastructure Pvt. Ltd. The NCLT approval comes after the SBI-led CoC gave its green signal in October last year.

The consortium will acquire Calyx for Rs 79 crore, meaning a haircut of 95.3% for lenders. This includes a sum of over Rs 30 crore that will be invested upfront, persons in the know told VCCircle.

Videocon Industries

State-run GAIL India has approached the bankruptcy tribunal to include its claim of around Rs 390 crore in the insolvency resolution process of debt-laden Videocon Industries, The Economic Times reported.

The tribunal will hear the matter further on July 8.

The resolution professional, Anuj Jain of KPMG, had rejected the claim following which the natural gas transportation and distribution company approached the tribunal.

There was already a dispute between GAIL and Videocon and it was in arbitration.

The NCLT judge has asked Videocon’s resolution professional to file his reply by June 10, and given GAIL until June 17 to file its rejoinder, the report said.

“Earlier, in a similar development, the resolution professionals of Essar Steel, as well as Alok Industries, had also rejected the claim of GAIL but after it contested in the NCLT, respective tribunals had directed the resolution professionals of those companies to include the claim as an operational creditor,” said Akshat Khare, partner of law firm Moson Le Exparts, who was appearing for GAIL.

Videocon Industries owes Rs 59,450 crore to financial creditors and nearly Rs 4,200 crore to its operational creditors as of April 9. The Videocon Group, which includes telecom, energy and consumer durables businesses, owes over Rs 85,000 crore to lenders.

PNB’s recovery plans

State-owned Punjab National Bank (PNB) has increased its bad-loan recovery target to Rs 25,000 crore for the current financial year. This marks more than a 50% increase over the Rs 16,000 crore that it recovered in 2018-19.

The Delhi-headquartered lender expects to recover around a quarter of the sum (Rs 6,000 crore) from two large corporate accounts -- Essar Steel Ltd and Bhushan Power & Steel Ltd. Both steelmakers are currently in the final stages of resolution under IBC.

In all, PNB had recovered bad loans worth Rs 16,000 crore in the financial year 2018-19. A quarter of this came from accounts undergoing insolvency, Rs 6,300 crore via one-time settlement and Rs 1,500 crore was realised through the sale of assets to asset reconstruction companies (ARCs). The recovery amount stood at Rs 5,617 crore in 2017-18.

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