INSUBCONTINENT EXCLUSIVE:
MUMBAI: Lenders dragged a bunch of power companies to the National Company Law Tribunal (NCLT), signalling their intention to seek an early
resolution to the issue of bad loans, just hours before the Supreme Court ordered status quo to be maintained on cases filed against
companies from sectors including sugar, shipping and power to proceed under the insolvency code.
ILFS Tamil Nadu Power Co, GMR Rajahmundry
Energy and Prayagraj Power Generation were among the companies taken to NCLT as bankers and promoters failed to find a solution to defaults
on loans taken by these companies.
Karnataka-based steel maker BMM Ispat was also taken to the NCLT by lenders just a day ahead of the RBI
deadline of Tuesday.
“These accounts together owe banks more than Rupees 20,000 crore and recovery proceedings have been initiated under
the insolvency code,” a lawyer for one of the cases told ET on condition of anonymity
“The process in the NCLT is already facing delays in admission, with some cases not being admitted for six months
We will have to wait anyway, the Supreme Court order notwithstanding.”
The 180-day period granted by RBI for resolving large corporate
loan defaults ended on Tuesday, after which banks had to refer these cases for insolvency proceedings
However, the Supreme Court halted proceedings against defaulters in the power, sugar, shipping and textile sectors on Tuesday, providing
relief to borrowers till the next hearing fixed for November 14.
Among the petitioners were associations of power, sugar and shipyard
The petitioners also included Prayagraj, which was taken to NCLT by the State Bank of India on Tuesday
Prayagraj owes lenders a total of Rupees 11,000 crore, of which Rupees 4,000 crore was lent by SBI.
Lawyers said the SC order only can be
used by the petitioners and that other debt-laden companies wanting to avoid the bankruptcy code have to approach the court for relief
“It appears from the order that it is not a blanket halt of bankruptcy proceedings
The status quo which the court has called for only refers to companies which have petitioned
It remains to be seen what the court says in November,” said KP Sreejith, managing director at IndiaLaw
The total exposure of banks to the power sector is Rupees 5.65 lakh crore, about a fifth of which is stressed
However, an SC stay has not improved the chances of a resolution of these companies.
“This status quo just says that the SC will hear all
matters which have been pleaded before high courts across the country,” said an RBI official.
“The highest court needs time to examine
Yes, banks cannot approach the NCLT with power sector cases, but it also does not mean that these companies can find solutions in the
Status quo means we all have to wait for the order,” he said.
