It's tough to conclude the resolution process in at least half of the 12 big loan defaulters within the 270 days time frame allowed under the Insolvency and Bankruptcy Code (IBC). Jaypee Infratech, Essar Steel and Bhushan Power & Steel have faced litigations, while Alok Industries, ABG Shipyard and Amtek Auto are likely to go through a second round of bidding or end up in liquidation. Outside the first 12 cases, the AV Birla group and Dalmias are fighting to takeover Binani Cement.
It became the first of the 12 large loan defaulters to exit bankruptcy. The Kolkata bench of the National Company Law Tribunal (NCLT) on Tuesday cleared Vedanta's Rs 5,320 crore resolution plan for Electrosteel, which is setting up a 2.5 million tonne steel plant near Bokaro. It owes Rs13,395 crore to lenders. The NCLT approved resolution plan entails over 50 per cent haircut for lenders.
It is going to see second round of bidding after the resolution professional declared the only bid of UK-based Liberty House as ineligible under Section 29(A) of the IBC because the company is yet to clear $3 million overdue to Exim Bank. However, the deadline for the completion of the resolution process will expire on April 28. Liberty House is believed to have offered Rs 5,200 crore for the beleaguered shipyard, which owes lenders Rs 18,539 crore.
Liberty House has emerged as the highest bidder for Amtek Auto and the deal value is expected to be around Rs 4,500 crore. Amtek has submitted its resolution plan for approval with the Chandigarh bench of the NCLT. However, the banks led by State Bank of India (SBI) is expected to ask the resolution professional of Amtek Auto to review the eligibility of Liberty House since it's yet to pay overdue to Exim Bank.
The lenders have chosen a clutch of high networth individuals led by Sharad Sanghi, the chief of Netmagic Solutions, to revive the bankrupt EPC (engineering, procurement and construction) company Jyoti Structures. They were the sole bidder, offering just about Rs 3000 crore to lenders over a period of 15 years while infusing equity capital in the range of Rs 150 to Rs 170 crore. The lenders will have to take a huge 80 per cent haircut.
Ahmedabad bench of NCLT said that the second round of bids for bankrupt Essar Steel was invalid and asked committee of creditors and the resolution professional to relook at both the bids of ArcelorMittal and Numetal from the first round. Both the bidders had approached the tribunal against the second round of bidding. The resolution professional had disqualified ArcelorMittal since they had stake in another bankrupt company, Uttam Galva. Numetal was a consortium formed by Russian bank VTB and a trust controlled by the estranged promoter of Essar Steel, Rewant Ruia. In the second round, Anil Agarwal's Vedanta Resources has also submitted a resolution plan. The sources say that the sale of Essar Steel will be delayed because of repeated litigations.
For beleaguered Jaypee Infratech, the resolution plan was submitted by multiple bidders, including Sudhir Valia of Suraksha Asset Reconstruction Company and Adani Group. The offers range between Rs 7,000 crore and Rs 8,000 crore. However, Jaiprakash Associates, the promoter company of Jaypee Infra, approached Supreme Court complaining that the company was undervalued and the original valuation would come to around Rs 16,000 crore. Besides, it submitted another resolution plan. The apex court said that Jaiprakash Associates was at liberty to submit a representation to the "competent authority". Jaypee group is now devising a strategy to move the NCLT with its bid.
Tata Steel emerged as the highest bidder of the company, with a Rs 36,000 crore resolution plan and 12 per cent equity offering to lenders. It may acquire three-fourths of Bhushan Steel's share capital by an equity infusion in it.
Monnet Ispat and Energy
The consortium led by Sajjan Jindal-promoted JSW Steel and AION Capital has received the letter of intent for acquiring the stressed asset of Monnet Ispat and Energy. They were the only bidder. The media reported that JSW-AION submitted a Rs 3,750 crore bid for the steelmaker.
Lenders have rejected the joint bid by Reliance Industries and JM Financial Asset Reconstruction Company for Alok. The firm owes around Rs 29,912 crore to lenders and the liquidation value is said to be around Rs 4,500 crore.
Bhushan Power and Steel
It is likely to go to second round of bidding as the offers received in the first round were lower than the expectation of the lenders. The company, which owes more than Rs 47,000 crore to its bankers, received bids from Tata Steel, JSW Steel and Liberty House, but only the first two were qualified. Liberty House had approached the tribunal for not considering its resolution plan. Earlier reports said that Tata Steel is the highest bidder with Rs 24,500 crore offer.
It has received seven bids, including from Ingen Capital group, I Square Capital, Asia Advisors, Metro Asset Services, Penn Energy, Than Solar Power and Solar Land. The resolution professional had earlier invited bids for individual assets in power and infrastructure, but extended the deadline to March 2018 after tepid response. The company has a debt of more than Rs 45,000 crore.
Another defaulter Era Infra has not yet been admitted in the NCLT. Outside the 12 cases, Binani Cement had got highest bid from Dalmia Bharat-led consortium. But UltraTech Cement of AV Birla group came up with an out-of-court offer. UltraTech on Thursday urged the Kolkata Bench of NCLT to either reject the offer made by Dalmia Bharat and accept its revised bid or pass an interim order asking the lender's committee to reconsider the offers made by both the companies.