Mumbai: The chairman and managing director of Kolkata-based Gujarat NRE Coke Ltd, Arun Kumar Jagatramka, has criticised bankers and regulators for allowing viable companies to go into liquidation as part of the resolution plan under the National Company Law Tribunal (NCLT). In an advertorial that appeared in The Economic Times on Tuesday, Jagatramka has sought more accountability from bankers for their actions in the insolvency proceedings.
This sharp rebuke from Jagatramka comes at a time when the Kolkata bench of the NCLT has ordered for the liquidation of his company.
Workers had filed an affidavit which said that by discharging 1,178 employees, their families, numerous small vendors, suppliers, contractors, job workers, and transporters of the company totalling about 10,000 would be affected. They had requested for a slump sale of the assets of the company including all its assets and properties as a going concern.
Jagatramka also alleged that a company is forced into liquidation due to the indecisiveness of bankers or due to their commercially wrong decision. “They (banks) prefer to push companies in liquidation rather than taking a commercial decision of resolution even if the NAV (Net Asset Value) of the resolution plan is much higher than the liquidation value. Banks feel they would be questioned on haircuts in resolution plan while no questions would be asked to them in liquidation irrespective of how paltry the value that liquidation might fetch, “ he said
Jagatramka added that while the IBC is a pragmatic process, the delivery process continues to follow the same mistakes committed under the corporate debt restructuring (CDR) process. “Unfortunately, IB Code in it current form supports the decision of lenders to lend but punishes the decision of the borrowers to borrow when the loan turns bad dud to reasons beyond the control of both," he added.
Gujarat NRE Coke is one of the companies affected by the recent ordinance which bars promoters from bidding for stressed assets unless they repay the interest and principal amount. Workers of the company have filed an affidavit with the Supreme Court to reconsider their resolution plan which could not be taken up due to paucity of time.