ERA Infra: RBI’s dirty dozen now all in NCLT

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New Delhi | Published: May 9, 2018 5:47:33 AM

Era owes banks little over Rs 10,000 cr; CBI booked UCO Bank ex-CMD in Rs 621-cr fraud.

rbi, nclt, insolvency and bankruptcy code, era infraWith Era being admitted under the IBC, the top 12 troubled companies, identified by the Reserve Bank of India (RBI) in June last year, are now in various stages of the resolution process.

The National Company Law Tribunal (NCLT) on Tuesday ordered the initiation of the corporate insolvency resolution process for Era Infra &Engineering under section 7 of the Insolvency and Bankruptcy Code (IBC). The debt-ridden realty firm, which owes lenders a little over Rs 10,000 crore, was referred to the NCLT by Union Bank of India.

The company is promoted by Delhi-based industrialist Hem Singh Bhurana. PTI reported on April 14 that the Central Bureau of Investigation (CBI) had booked former chairman and managing director of Uco Bank Arun Kaul and others in connection with an alleged Rs 621-crore loan fraud which caused a loss of over Rs 737 crore to the bank. Besides Kaul, the CBI booked Bhurana and two chartered accounts among others. Kaul, who was the CMD of the Kolkata-headquartered bank, allegedly facilitated the accused company in obtaining the loan.

With Era being admitted under the IBC, the top 12 troubled companies, identified by the Reserve Bank of India (RBI) in June last year, are now in various stages of the resolution process. CLSA estimates these companies account for about Rs 2.77 lakh crore in bad loans.

In some instances, where the 270-day time period provided is either over or almost over, the NCLT benches have allowed a grace period. In the case of Era Infra, it has taken almost a year for the issue of “maintainability” to be settled. This is because the company faced 18 winding-up petitions against it in Delhi High Court. The case was first heard on July 5, 2017 but the tribunal decided only in February, 2018, that insolvency resolution process under section 7 of the IBC could be triggered. This was possible, it observed, because the winding up petitions against the company had not been admitted.

Lenders to the company include Uco Bank, Bank of India, IDBI Bank, Karnataka Bank, Allahabad Bank, State Bank of India and Punjab National Bank (PNB). As at the end of December, 2016, the Bharana family collective owned just 2.28% of the company. Other promoters included Adel Landmarks Ltd which held 30.75% of the equity The resolution professional, Rajeev Chakraborty, will now need to come up with a resolution plan in consultation with a committee of creditors (CoC) within 180 days — this can be extended to 270 days.

According to its website, Era Infra’s total debt, at the end of March, 2016, stood at Rs 10,065 crore. In 2016-17, the company reported a net loss of Rs 1,295 crore on the back of Rs 1,211 crore in revenues. Era Infra defaulted on dues of Rs 681.04 crore in term loans and $11.97 million, as on May 31, 2017, to Union Bank of India. Lenders to Era had initiated a corporate debt restructuring (CDR) package for Era Infra back in 2013, but the debt-ridden firm failed to meet its commitment. On July 22, 2015, Union Bank classified Era’s account as non-performing asset (NPA) and over the next few months all other lenders followed suit..

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