The resolution professionals of the 11 large accounts in the Reserve Bank of India’s (RBI) first list of stressed assets have asked the Insolvency and Bankruptcy Board of India (IBBI) to ban trading in shares of these companies, sources close to the development said. They have also asked the IBBI if they could exempt these companies from publishing their quarterly results till such time as their resolution plans are in place. Since the resolution professionals are in advanced stages of finalising the resolution plans for these accounts, volatility in the share prices of these companies is impeding discussions on valuations with the potential investors, the sources said. “We don’t want unnecessary noise around the process. With every news break, there is a lot of volatility in the share price, which is impacting the valuation,” a resolution professional in charge of a large stressed asset said.
Most of the top 11 accounts have received expressions of interest from large Indian as well as global corporates like Tata Steel, JSW Steel, Vedanta, Bharat Forge, Arcelor Mittal, the Piramal Group and others. The due diligence process and discussions on valuations are likely to close by the middle of this month and the interested investors are likely to place their bids after that. Recently, Sajjan Jindal, the chairman and managing director of JSW Steel, had said on social networking site Twitter that shares of companies referred to the National Company Law Tribunal (NCLT) should be suspended from trading. “Publishing the quarterly results is a very time-consuming exercise. It also requires extensive coordination with various stakeholders. With the deadline for finalising a resolution plan just around the corner, it will quicken the process if we can focus only on it,” the resolution professional in charge of another large stressed asset said. “We have written to the IBBI. Now it is up to them and the ministry of corporate affairs to take a decision. It will require a clearance from Sebi as well. We are in touch with the committee regularly,” the resolution professional added.
Last month, the government set up an Insolvency Law Committee to monitor the functioning and implementation of the Insolvency and Bankruptcy Code (IBC). The committee will identify issues that may be impacting the efficiency of the code and will also make suitable recommendations to address the identified issues. Recently, the president gave his assent to an ordinance that seeks to amend the IBC to prevent wilful defaulters, dubious promoters, undischarged insolvents and unscrupulous, undesirable persons from misusing the law. The ordinance also bars those promoters whose accounts have been classified as non-performing assets for at least a year. In June, the RBI asked banks to refer 12 accounts totalling about 25% of the `8-lakh crore non-performing assets to the NCLT. Subsequently, Jyoti Structures, Essar Steel, Monnet Ispat and Energy, Alok Industries, Electrosteel Steels, Amtek Auto, Bhushan Steel, Bhushan Power and Steel, ABG Shipyard, Lanco Infratech and Jaypee Infratech have been admitted by the NCLT. In August, the central bank sent a second list of accounts, including companies such as Videocon Industries, Uttam Galva Steels and IVRCL, to the banks to be referred to the NCLT. The lenders have time till December 13 to resolve these accounts outside the NCLT, after which they will be admitted for insolvency proceedings.