Edelweiss Finance & Investment has been mandated by UBI to act as a process adviser in the substitution of the concessionaire through the Swiss challenge method.
According to a National Company Law Tribunal (NCLT) order dated August 11, Supreme Manor was given a joint lenders’ forum (JLF) restructuring package.
Nevertheless, its financial position continued to deteriorate and there were irregularities found in the payment mechanism in respect of the recast package.
Thereafter, lenders invoked strategic debt restructuring (SDR), with November 24, 2016, as the reference date. The JLF also gave in-principle approval for change of management outside SDR by invocation of pledged shares.
Consequently, the lenders invoked the pledge on 51% of the shares as part of the exercise of change in management.
The consortium lenders invited bids and selected the one submitted by Kalyan Toll Infrastructure (KTIL) in April 2018. However, in the next JLF meeting held on May 11, 2018, the process advisor informed the members of the JLF that a rating agency had issued a credit opinion of RP5 to the bid submitted by KTIL involving change in ownership into KTIL.
In view of the Reserve Bank of India (RBI) circular dated February 12, 2018, the lenders agreed that the bid involving change in ownership could not be considered for implementation as it did not receive a credit opinion of RP 4 or better. UBI then issued a recall notice on June 1, 2018, requiring Supreme Manor to make the payment of the loan to the extent of Rs 160.81 crore as on January 30, 2018.
“The notice reveals that the account has been classified as NPA (non-performing asset) as per the prudential norms of RBI guidelines with retrospective effect from 24.11.2016,” the order said. It further adds that despite repeated reminders, the borrower failed and neglected to regularise the credit facilities.
Eventually, UBI moved to file an insolvency petition against Supreme Manor.
The debtor in turn moved to quash the petition on the grounds that since the circular dated February 12, 2018, had been held ultra vires the provisions of the Banking Regulation Act, all actions taken under it must be declared null.