NCLT reserves order in Union Bank’s insolvency plea against Era Infra

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New Delhi | Published: April 26, 2018 2:17:16 AM

The National Company Law Tribunal (NCLT) on Wednesday reserved its order on Union Bank of India’s insolvency petition against Era Infra Engineering, which defaulted on paying Rs 681.04 crore in term loans and $11.97 million in ECBs, as on May 31, 2017, to the public sector lender.

Arguing in favour of admission, Union Bank’s counsel Nesar Ahmad said though a Corporate Debt Resolution (CDR) mechanism was provided to the company back in 2013, it failed to keep its commitment. Arguing in favour of admission, Union Bank’s counsel Nesar Ahmad said though a Corporate Debt Resolution (CDR) mechanism was provided to the company back in 2013, it failed to keep its commitment.

The National Company Law Tribunal (NCLT) on Wednesday reserved its order on Union Bank of India’s insolvency petition against Era Infra Engineering, which defaulted on paying Rs 681.04 crore in term loans and $11.97 million in ECBs, as on May 31, 2017, to the public sector lender.

A consortium of 22 lenders led by Union Bank had filed the plea against the city-based firm under Section 7 of the Insolvency and Bankruptcy Code (IBC) in the NCLT’s principal bench here in June last year. Barring Era Infra, all other 11 troubled companies including Essar Steel and Bhushan Steel referred by lenders to NCLT, as per the Reserve Bank of India’s June 13 directive last year, have already been admitted and are under various stages of resolution process.

Arguing in favour of admission, Union Bank’s counsel Nesar Ahmad said though a Corporate Debt Resolution (CDR) mechanism was provided to the company back in 2013, it failed to keep its commitment. On June 22, 2015, Era’s account with Union Bank was classified as non-performing asset (NPA) and thereafter, over the next few months, its accounts became NPA with all other lenders.

“In view of default on part of the corporate debtor in paying banks’ dues since past two years, the lenders decided in June, 2017 to file an application with NCLT under the IBC,” Ahmad said.

As per the IBC, creditors (both financial and operational) and debtors among others, upon payment default of a minimum of Rs 1 lakh, can refer the defaulted firm to the NCLT seeking insolvency proceedings.

Era Infra’s counsel Kapil Sankhla countered the lender’s plea saying that various government agencies owe around Rs 12,000 crore to the company which could be used to pay off the lenders.

“We only want to help the lenders. Our intention is to rehabilitate the company and maximise the assets,” he said.

However, a two-member NCLT bench, headed by justice M M Kumar, did not buy the argument, saying, “ Even if you say that you will be able to get three times, four times or 10 times more of the default, we won’t be able to help.” It reserved the order after concluding the hearings from both sides.

According to its website, Era’s total debt, at the end of March, 2016, stood at Rs 10,065 crore. It reported a net loss of Rs 1,295 crore on the back of Rs 1,211 crore in revenues in FY17.

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