In a new development in the insolvency proceedings of two Srei companies, erstwhile promoters Kanorias have put forward a fresh settlement offer to the creditors.
According to sources close to the Kanorias, the proposal to withdraw Srei Infrastructure Finance (SIFL) and its subsidiary Srei Equipment Finance (SEFL) from the corporate insolvency resolution process (CIRP) under Section 12A of the IBC, was made through SIFL promoter company Adisri Commercial. As per the resolution offer, the creditors’ entire claim of around Rs 32,000 crore will be repaid using multiple financial instruments such as upfront cash, NCDs, OCDs and equity over time.
“A letter with the proposal to withdraw SIFL and SEFL from insolvency proceedings under Section 12A of the IBC was sent to the administrator. The fresh settlement offer to the lenders includes Rs 3,500 crore upfront cash with net present value (NPV) of Rs 7,000 crore, which is highest among existing bid offers,” the sources told FE.
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This move from Adisri Commercial, which has a stake of around 60% in SIFL, came days ahead of the results of the consolidated committee of creditors voting on the three resolution plans, submitted by the bidders — National Asset Reconstruction Company (NARCL), consortium of Varde Partners and Arena Investors, and Authum Investment and Infrastructure
Administrator Rajneesh Sharma was not available for a comment.
“The administrator has not received any letter till date. If any resolution plan comes, it would be dealt suitably. The plan should be qualified under Section 12A of the IBC. And, the decision will be taken by the CoC,” sources close to the development told FE.
“The voting result on the resolution plans is likely to come on February 15. Then there will be a CoC meet,” the sources added.
The Kanorias feel that existing resolution plans under consideration by Srei CoC fail to offer a fair and equitable consideration to both creditors and shareholders of Srei companies. “Severe erosion of value has been happening since the company got taken over by the administration. They are trying to restore the company’s value through this payment plan under Section 12A of IBC,” the sources cited above said.
After the challenge mechanism process conducted by the CoC ended, state-backed NARCL’s offer of Rs 5,555 crore in NPV terms, which includes upfront cash of Rs 3,180 crore, was found to be the highest. Authum Investment and Infrastructure’s bid of Rs 5,526 crore, in NPV terms, was adjudged the second-highest during the process. The resolution plan submitted by the consortium of Varde Partners and Arena Investors consists of a financial bid of around Rs 4,680 crore in terms of NPV, including Rs 3,250 crore upfront cash amount.
The total admitted claims of the financial creditors of the two NBFCs are at Rs 32,750.22 crore. State Bank of India
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Incidentally, Section 12A of IBC was inserted into the code, paving the way for erstwhile management of the corporate debtor and the creditors to settle the matters without facing the jostle of the court proceedings.
“Under Section 230, the erstwhile promoters had tried making full payment with interest in October 2020, but it was rejected by the creditors without any explanation,” according to sources close to the Kanorias.
The Supreme Court last month dismissed Adisri Commercial’s appeals seeking stay on the insolvency proceedings initiated by the RBI against the two companies.