Banks refer Amtek Auto, Electrosteel Steels, Jyoti Structures for bankruptcy proceedings
Mumbai: Banks on Wednesday initiated bankruptcy proceedings against Amtek Auto Ltd, Electrosteel Steels Ltd and Jyoti Structures Ltd on, taking the total number of cases filed under the Insolvency and Bankruptcy Code (IBC) to five, said two people aware of the matter.
State Bank of India, which is the lead banker, filed the bankruptcy cases against Electrosteel Steels and Jyoti Structures with the National Company Law Tribunal (NCLT). In Amtek Auto’s case, Corporation bank, which led the lending consortium, has filed the case, the people said, asking not to be identified.
On Tuesday, Essar Steel Ltd and Monnet Ispat and Energy Ltd were the first of the 12 large bad loan accounts identified by the Reserve Bank of India (RBI) against which bankruptcy proceedings were filed. These 12 accounts together account for a quarter of the banking system’s bad loans.
Spokespersons at Corporation Bank and State Bank of India declined comment.
Spokespersons at Jyoti Structures and Electrosteel Steels couldn’t immediately be reached.
A spokesperson for Amtek Auto didn’t respond.
At the end of March 2017, Jyoti Structures had debt of Rs3,387.25 crore, Electrosteel Steels Rs7,505.08 crore, and Amtek Auto Rs3,928 crore.
Jyoti Structures was one of the companies hit by problems in the power sector arising from the lack of fuel linkages or problems in land acquisition. Lenders invoked RBI’s Strategic Debt Restructuring (SDR) norms in 2015 and restructured the debt outside the provisions of SDR. Since then, banks have been trying to sell their 51% stake in the company with no success.
In Electrosteel Steels’s case, the company went through restructuring under both the corporate debt restructuring (CDR) and SDR provisions. Lenders were in talks with Tata Steel Ltd and London-based First international Group Plc to sell a majority stake in the company.
Amtek Auto had been trying to sell various group businesses to reduce the debt on its books, ever since it defaulted on its bond payment of Rs800 crore in September 2015. According to a 15 March Mint report, lenders to the auto components firm asked it to either repay loans or convert the outstanding into equity shares or warrants.