Srei lenders may explore possibility of selling accounts to ARCs

the lenders have earlier extended the deadline to submit resolution plans for the insolvent Srei firms by 10 days to August 10, after three of the prospective bidders requested them for the extension of the timeline.

Srei lenders may explore possibility of selling accounts to ARCs
The process of corporate insolvency resolution for the two Srei group companies would continue even if the lenders opted for selling the assets to ARCs said Uco Bank MD & CEO Soma Sankara Prasad. Image: FE Online.

Lenders to Srei group companies, which are under insolvency resolution process, may explore the possibility of selling these accounts to asset reconstruction companies (ARCs), including National Asset Reconstruction Company (NARCL), in order to ensure value maximisation.

Significantly, the lenders have earlier extended the deadline to submit resolution plans for the insolvent Srei firms by 10 days to August 10, after three of the prospective bidders requested them for the extension of the timeline. The deadline earlier was July 30. It has been extended for the third time.

Uco Bank MD & CEO Soma Sankara Prasad said the lenders will “definitely” explore other routes for better price realisation for the Srei assets. “I think one call that the lenders will have to take is that they have to see if any of the ARCs, including NARCL, are interested in these assets. And, if they are interested in Srei, what is the price they are offering. Whether it makes sense for us, because after the sales we (lenders) will get cash upfront immediately,” Prasad told reporters during a virtual press meet to declare Uco Bank’s quarterly results on Friday.

Also Read| Lenders extend deadline for Srei resolution plans

Prasad said lenders are still at “a very preliminary stage” on the subject of exploring the possibility of selling Srei accounts to ARCs as they have not even received a price “quote” from NARCL. “We are having a joint lenders meeting on Monday (August 8), where we will also check with other banks on whether they have any interest. Because the decision has to be taken by the consortium…this is an option we can explore. It is not that I am saying that I will take this option. We will have to look at various options,” he said.

The process of corporate insolvency resolution for the two Srei group companies would continue even if the lenders opted for selling the assets to ARCs, he added. Three potential investors had earlier requested the Committee of Creditors (CoC) to extend the deadline for submitting resolution plans based on their deliberations with the CoC. After that the CoC has considered an extension of 10 days for final submission of the plans to the administrator.

However, the September 4 deadline will be fixed for submitting the proposed resolution plan of the highest bidder (H1) to the Kolkata bench of the National Company Law (NCLT) as decided by the tribunal.

Notably, the final list of the prospective resolution applicants for Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL) consists of as many as 13 entities, including Vedanta Ltd, Jindal Power, ARCIL, JM Financial Asset Reconstruction Company and Edelweiss Alternative Asset Advisors.

Also Read| Srei: Auditor hints at Rs 2,000-crore fraudulent transactions

Insolvency proceedings against SIFL and its subsidiary SEFL, the two NBFCs, commenced from October, 2021 after the insolvency petitions, filed by the Reserve Bank of India, had been approved by the Kolkata bench of the NCLT. Rajneesh Sharma, former chief general manager of Bank of Baroda, took charge of the two Srei companies after the central bank came down heavily on both the companies over governance issues and superseded the boards of directors.

The administrator has received transaction auditor reports from BDO India which indicate that there were certain transactions which were fraudulent in nature under the erstwhile management and the total impact of these transactions amounted to over Rs 2,000 crore. According to the transaction auditor reports, three entities — Shristi Group, Samsara Energy (earlier known as Quippo Energy) and Viom Infra Ventures (earlier known as Quippo Infrastructure) — were involved in the fraudulent transactions during 2017-18 to 2020-21. The monetary impacts of these transactions caused by disbursements made to Shristi Group, Samsara Energy and Viom Infra Ventures were Rs 1,415.22 crore, Rs 284.71 crore and Rs 433.81 crore, respectively.

Earlier, the administrator had also received an initial report on certain fraudulent transactions from BDO India. The total impact of these fraudulent transactions was then stated at around Rs 3,025.73 crore.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Photos