The administrator of two insolvent Srei companies has returned the resolution plan submitted by the erstwhile promoters, the Kanorias, to withdraw the companies from insolvency proceedings, stating that he is not the “competent authority” to accept it, sources close to the development said. As insolvency petitions against Srei Infrastructure Finance (SIFL) and its subsidiary Srei Equipment Finance (SEFL) were filed by the Reserve Bank of India (RBI), the RBI would be the competent authority to accept or reject the resolution plan in this case, the sources said.
The Kanorias last week made a fresh settlement offer to creditors. The proposal under Section 12A of the Insolvency and Bankruptcy Code (IBC) was made through SIFL promoter company Adisri Commercial. As per the offer, the creditors’ entire claim of around Rs 32,000 crore will be repaid using multiple financial instruments such as upfront cash, NCDs, OCDs and equity over time. Kanorias have claimed that their fresh settlement offer to the creditors is “highest” among existing bid offers.
“Adisri Commercial submitted the plan to the administrator. But he returned the plan as he is not the competent authority to accept it under Section 12A of the IBC. Under Section 12A, a resolution plan should be submitted to the insolvency applicant. Here, the RBI had filed the insolvency petition for initiation of the insolvency proceedings. So, a plan should be sent to the RBI,” the sources said.
“The administrator has sent a letter to Adisri Commercial and informed that he cannot accept the plan,” the sources added. An e-mail sent to the administrator, Rajneesh Sharma, remained unanswered till press time. Sources close to the Kanorias said they have not received any formal intimation, but that “it would be preposterous on behalf of the RBI-appointed administrator or the bankers not to accept such a proposal which is highest in value and merit”.
The fresh settlement offer to the lenders includes Rs 3,500 crore upfront cash with net present value of Rs 7,000 crore. Adisri Commercial, which has a stake of around 60% in SIFL, submitted the resolution plan days ahead of the disclosure of the results of the consolidated committee of creditors’ voting on the three resolution plans, submitted by the bidders: National Asset Reconstruction Company (NARCL), consortium of Varde Partners and Arena Investors, and Authum Investment and Infrastructure, to acquire the two companies. The resolution plan which gets the highest vote will be treated as approved by the CoC.
After the challenge mechanism process conducted by the CoC ended, state-backed NARCL’s offer of Rs 5,555 crore in NPV terms, which includes upfront cash of Rs 3,180 crore, was found to be the highest. Authum Investment and Infrastructure’s bid of Rs 5,526 crore, in NPV terms, was adjudged the second-highest during the process. The resolution plan submitted by the consortium of Varde Partners and Arena Investors consists of a financial bid of around Rs 4,680 crore in terms of NPV, including Rs 3,250 crore upfront cash amount.
The insolvency proceedings against SIFL and SEFL commenced in October, 2021 after insolvency petitions filed by the Reserve Bank of India were approved by the Kolkata bench of the National Company Law Tribunal.
The total admitted claims of the financial creditors of the two NBFCs are at Rs 32,750.22 crore. State Bank of India, Punjab National Bank, Axis Bank, HDFC Bank, Union Bank of India, Canara Bank, IDBI Bank, UCO Bank and Indian Overseas Bank, among others, are the financial creditors of the two firms.