By Shamik Paul
With about four months having gone by since insolvency proceedings were initiated for a clutch of 12 companies under the National Company Law Tribunal (NCLT), the committees of creditors have requested for additional time to come up with a resolution plan for these beleagured businesses. Banks, including State Bank of India, Punjab National Bank and IDBI Bank, which are part of the committee of creditors for the 12 large assets, have asked the NCLT to extend the period for finalising a resolution plan by an additional three months, persons familiar with the development said. Under the Insolvency and Bankruptcy Code, once a case is admitted by the NCLT, a resolution plan must be in place within 180 days of admission. This is extendable by up to 90 days. In case there is no plan or the committee does not agree on one, the company will go into liquidation.
Senior officials at large state-run banks said for some of the cases, it might take more than nine months for the resolution plans to be finalised. Bankers are seeking additional time to firm up a resolution plan since the due-diligence process is time-consuming and negotiations are protracted, people close to the development explained. Given that the insolvency process is new to most stakeholders, including resolution professionals (RPs), this is not surprising, they added. “These are large companies, and we are hopeful they won’t be pushed into liquidation immediately after the nine-month period is over,” a senior official from a large state-run bank said. “The due-diligence is taking a lot of time,” he added.
Potential investors including large corporates such as Tata Steel, JSW Steel as well as global private equity and stressed assets funds such as Oaktree Capital Management, AION Capital, Blackstone and others are believed to have shown interest in acquiring stakes in the companies but would like to cut sweet deals. Bankers, for their part, are trying to recover as much of their dues as possible.
Bankers said they expect the resolution plans to be finalised only by the end of Q4FY18 or in Q1FY19. “Expressions of interest has already been called for 8 of the cases. Whatever EOI has been received, they are in the process of being evaluated by the respective interim RPs and then they will be sent to the committee of creditors of the respective companies. The process is on. We can expect certain resolutions in Q4 and maximum in Q1FY19,” a senior official of a state-run bank, that has an exposure to 11 of the 12 large accounts, said.