The Administrator of two insolvent Srei companies has received the Reserve Bank of India’s “fit and proper” approval for state-backed National Asset Reconstruction Company (NARCL) and he submitted the same before the National Company Law Tribunal (NCLT) for its consideration, sources with knowledge of the matter said.
The approved resolution plan of NARCL was submitted by the administrator, Rajneesh Sharma, to the Kolkata bench of the NCLT on February 18 for its approval. The consolidated committee of creditors (CoC) for the two Srei companies approved the resolution plan of NARCL with the highest voting amongst the bidders.
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The resolution plan of the government-owned ARC was approved with a 89.25% voting share of the consolidated CoC for Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL).
“The Administrator received the No Objection letter from RBI for NARCL on March 23. He submitted it before the NCLT on the next day,” the sources cited above told FE. An e-mail sent to the administrator remained unanswered till press time.
Notably, the tribunal is hearing the case related to Adisri Commercial, the erstwhile promoter company of two insolvent Srei firms, urging it to set aside its order that had admitted the debt-laden firms for insolvency proceedings, and consider application on the fresh settlement offer to the creditors.
Adisri Commercial, which has around 60% stake in Srei Infrastructure Finance (SIFL), questioned the NCLT’s order on initiating the corporate insolvency resolution process (CIRP) against SIFL and its subsidiary Srei Equipment Finance (SEFL) since it disclosed “error apparent on face of records” as the dates of defaults mentioned in the order allegedly fall within a period when initiation of corporate insolvency resolution process (CIRP) is barred under Section 10A of the Insolvency and Bankruptcy Code.
The Kanorias, the erstwhile promoters of two Srei companies, also proposed to withdraw SIFL and SEFL from insolvency proceeding under Section 12A of the IBC. The appeal was made through Adisri Commercial. As per the resolution offer, submitted by the erstwhile promoters, creditors’ entire claim of around Rs 32,000 crore would be repaid using multiple financial instruments such as upfront cash, NCD’s, OCD’s and equity over time. Kanorias have claimed that their fresh settlement offer to the creditors is “highest” among existing bid offers.
Moreover, Authum Investment and Infrastructure, whose financial bid was adjudged the second-highest in net present value (NPV) terms after the challenge mechanism process concluded, filed a petition before the tribunal, challenging the process, adopted by the CoC for the Srei companies, in which NARCL became the highest bidder.
The hearing in the matters will continue on March 31.
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Three bidders — NARCL, a consortium of Varde Partners and Arena Investors, and Authum Investment — participated in the challenge mechanism process on January 3, adopted by the CoC, to acquire the two NBFCs under the CIRP. After the challenge mechanism process ended, NARCL’s offer of Rs 5,555 crore in net present value (NPV) terms was found to be the highest. Authum Investment’s bid of Rs 5,526 crore, in NPV terms, was adjudged the second-highest. The resolution plan submitted by the consortium of Varde Partners and Arena Investors consisted of a financial bid of around Rs 4,680 crore in terms of NPV.
The insolvency proceedings against SIFL and SEFL commenced in October, 2021 after insolvency petitions filed by the Reserve Bank of India were approved by the Kolkata bench of the NCLT. The total admitted claims of the financial creditors of the two NBFCs are at Rs 32,750.22 crore. State Bank of India, Punjab National Bank, Axis Bank, HDFC Bank, Union Bank of India, Canara Bank, IDBI Bank, UCO Bank and Indian Overseas Bank, among others, are the financial creditors of the two firms.