SBI moves NCLT against Bhushan Steel
New Delhi: The State Bank of India (SBI) on Thursday moved the National Company Law Tribunal (NCLT) against Bhushan Steel Ltd, claiming the company had defaulted on loans of over Rs43,000 crore.
Separately, Bhushan Steel’s sister concern, Bhushan Power and Steel Ltd, was also dragged to the NCLT on Thursday by Punjab National Bank (PNB) over a default of about Rs37,000 crore.
The matter was brought before a bench headed by NCLT president M.M. Kumar, who sought a response from the defaulting companies and said the matter would be taken up at a later date. The two cases will be heard together.
The two firms together are among the 12 loan defaulters identified by the Reserve Bank of India (RBI) to the NCLT for initiation of insolvency proceedings. On 15 June, directions were issued to banks by RBI to initiate insolvency proceedings against the defaulting companies under provisions of the Insolvency and Bankruptcy Code 2016. Acting on this, the SBI and PNB have sought the tribunal’s intervention in the insolvency proceedings against the two firms within the provisions and rules of the new code.
As per the Insolvency and Bankruptcy Code, the case has to be admitted within 14 days of the filing of the petition.
Essar Steel, one of the defaulting firms, has approached the Gujarat high court seeking the setting aside of RBI’s directive to banks on grounds that it is already discussing a restructuring proposal with its lenders.
Among others, Jyoti Structures Ltd has been admitted so far in the scheme of things for insolvency and bankruptcy proceedings.
“It will not be easy to part promoters from their asset. They will try every possible means to stick around. I believe that the emphasis from banks was always on resolution since liquidation will potentially involve large haircut,” said Saswata Guha, director, Fitch Ratings.
As reported by Mint on 12 July, promoters of Bhushan Steel, Era Infra Engineering Ltd and Amtek Auto have taken operational roles in their companies in order to remain close to the action when the insolvency professional takes over. In June, RBI told banks to set aside 50% of the loan amount as likely losses for all cases referred to the NCLT. RBI also said that provisioning should be 100% in those cases that fail to get resolved under the insolvency proceedings and instead are forced into liquidation. Both cases related to Bhushan Steel will be heard next on 19 July.
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