Even as banks try to recover tens of thousands of crores in dues from defaulting firms, companies — at times from the same group — claim these defaulting firms owe them money. Documents reviewed by FE show a few defaulting firms on the two lists put out by Reserve Bank of India (RBI) have claimed they are operational creditors to other firms also on the lists. Moreover, companies belonging to a certain business group have made claims on others firms in the same group. For instance, the list of claimants of Essar Steel includes what appear to be 21 group companies that are together looking to recover Rs 6,012 crore from the steelmaker.
FE sought a comment from Essar Steel on the claims of the 21 companies but received no response till the time of going to press. These claims account for approximately a fourth of the total claims filed by all operational creditors of Essar Steel of an estimated Rs 22,914 crore. Again, Uttam Galva and Jaypee Hi-Tech Casting Centre have claimed Rs 1.4 lakh and Rs 71 lakh, respectively, from Essar Steel.
While Uttam Galva and Jaypee Group (parent company of Hi Tech Casting) were named by the central bank in its second list of 28 defaulters, Essar Steel featured on the first list of 12 accounts. While the claims are small compared with the size of Essar Steel’s total debt of Rs 44,000 crore, they nevertheless show the interconnected nature of these businesses. More than 1,600 operational creditors have filed claims on Essar Steel for an amount of Rs 22,914 crore, as on October 31. The central bank has identified companies that owe banks large amounts and has asked lenders to find a solution for the stressed assets under the Insolvency and Bankruptcy Code (IBC), 2016, if they are unable to come up with a recovery plan. The country’s banking system has bad loans of an estimated Rs 8.5 lakh crore, about a tenth of the total loans outstanding. In another case, Jayaswal Neco, on the RBI’s second list, has sought Rs 2.1 crore from Amtek Auto, which was named by the central bank as part of the first list and is undergoing a corporate insolvency process managed by a resolution professional. Meanwhile, 541 operational creditors to Amtek Auto have filed claims of Rs 223.8 crore.
For Bhushan Power, one of the claims has come from Essar Automation, though it could not be ascertained as to who the promoters of this company are. According to Bhushan Steel’s list of claims, EPC Constructions India (formerly known as, Essar Projects (India)) has claimed Rs 99.5 lakh from the steelmaker. Essar Projects (India) is part of the Essar Group. Emails sent to these companies seeking comments did not elicit any response till the time of going to press. IBC states that “operational creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred”. The code goes on to say that when any corporate debtor (borrower) commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process. While the National Company Law tribunal has admitted 11 companies, the deadline to resolve the 28 stressed accounts ended on December 13, and banks now have time till December 31 to take unresolved accounts to the bankruptcy court.