Era Infra says insolvency process may clash with pending winding-up pleas
Era Infra Engineering questioned the NCLT over whether insolvency proceedings can be initiated against it when winding-up petitions are pending against the firm
Mumbai: Era Infra Engineering Ltd on Tuesday questioned the Delhi bench of the National Company Law Tribunal (NCLT) over whether insolvency proceedings can be initiated against it when winding-up petitions are pending against the company.
The tribunal was hearing an insolvency petition filed by Union Bank of India against Era Infra. The company is among 12 loan defaulters identified by the Reserve Bank of India (RBI) for the launch of insolvency proceedings by creditors.
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Manoj K. Singh, founding partner of Singh and Associates, a law firm that represents Era Infra Engineering, said the company was in favour of insolvency proceedings, but the overlap with winding-up petitions pending in the courts needs to be addressed.
He also said that the fact that winding-up petitions were pending needs to be disclosed in line with the Insolvency and Bankruptcy Code.
If both NCLT proceedings and winding-up petitions overlap, “it will create conflict and possibly impede the resolution process”, Singh said.
Eighteen winding-up petitions are pending before the Delhi high court against Era Infra Engineering. These were filed by various operational and financial creditors of the company. Union Bank of India is not among them.
The tribunal has sought the assistance of both counsel and the next hearing is scheduled for 25 July, said Singh. “In principle, we are in favour of the insolvency process”, because Era has a large amount of funds tied up in arbitration claims that could help in the revival of the company and enable it to repay debt, he said.
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Winding-up petitions are favoured when a debtor is unable to pay for its liabilities, while insolvency proceedings entail a resolution process “and only if nothing happens, there is liquidation”, he added.
Era Infra does not agree with the amount claimed by Union Bank of India. Singh said the amount can be decided by an insolvency professional.
The default amount claimed by the bank is Rs681.04 crore, along with an overdue external commercial borrowing of $11.97 million up to 31 May 2017.
Era Infra Engineering’s debt is owed to the bank and not to a consortium of lenders, Singh said.